The banking industry emerged triumphant in 2023, a year that had threatened to be catastrophic. Rapid industry intervention averted the nightmare scenario of a contagion-driven financial crisis fueled by multiple bank failures in the US and Europe.

Last year’s mini-crisis of bank failures was best seen as the result of idiosyncratic management lassitude at the eventually rescued banks. However, the exposed risks inherent in app-based banking and the potential for bank collapse based on rapid mass deposit withdrawals provided a wake-up call for the industry, most pointedly among the rapidly proliferating neobank challengers.

As a result, boosting the current account savings account ratio and improving the “stickiness” of deposits became a central focus for bank CEOs last year.

As in 2022, the net interest margin (NIM) environment was optimal due to tight central bank monetary policy. Last year, a long-absent dynamic entered the fray: positive return on equity, which reemerged after being negative or flat in the 15 years since the global financial crisis of 2007-2009 and averaged 9% last year.

Bank profits in the Asia-Pacific region soared, with many lenders scoring record high net income—even in sclerotic Japan, where the 12-year battle fought by the banking sector against negative interest rates would seem to be ending as that easy money regime draws to a close. China was a notable absentee from the party: A fraught property sector shredded sentiment.

Last year, the global banking industry showed greater cost efficiency and improved asset quality. Still, the direction of travel will be determined by economic growth; central bank base rate moves, particularly from the US Federal Reserve; the demand for credit; and the pace of loan delinquency.

As the cost of capital came into focus and banks looked to shrink cost-to-income (CTI) ratios, the industry shed 60,000 jobs globally last year, the highest tally since the crisis. Investment banking fee wallets collapsed as deal-making and listings shriveled.

At the same time, traditional bank lending faced the threat of a thriving private credit market engineered by the nonbank financial sector. Leveraged buyout funds were more likely to be supplied by a large hedge fund than a big bank and at more competitive rates.

Environmental, social, and governance (ESG) issues remained a dominant theme: in Europe as a total belt-and-suspenders operational input thanks to the tightening of the regulatory straitjacket, and in Asia as companies and banks played catch-up in the sustainability game during the start of an ESG-focused regulatory convergence manifesting in the region.

Sustainable finance dominates across the financing spectrum globally, whether in transition format, which dominates in Japan, or the full-on green/impact issuance typical in Europe and the US and burgeoning in Asia-Pacific, excluding Japan.

In Europe, banks had their most profitable year on record, thanks to the NIM effect, resilient asset quality, and low CTI ratios. Bank for International Settlements capital-requirement metrics were in rude health, with more capital returned to bank shareholders last year than at any other time since the crisis.

The banking industry emerged triumphant in 2023, a year that had threatened to be catastrophic. Rapid industry intervention averted the nightmare scenario of a contagion-driven financial crisis fueled by multiple bank failures in the US and Europe.

Last year’s mini-crisis of bank failures was best seen as the result of idiosyncratic management lassitude at the eventually rescued banks. However, the exposed risks inherent in app-based banking and the potential for bank collapse based on rapid mass deposit withdrawals provided a wake-up call for the industry, most pointedly among the rapidly proliferating neobank challengers.

As a result, boosting the current account savings account ratio and improving the “stickiness” of deposits became a central focus for bank CEOs last year.

As in 2022, the net interest margin (NIM) environment was optimal due to tight central bank monetary policy. Last year, a long-absent dynamic entered the fray: positive return on equity, which reemerged after being negative or flat in the 15 years since the global financial crisis of 2007-2009 and averaged 9% last year.

Bank profits in the Asia-Pacific region soared, with many lenders scoring record high net income—even in sclerotic Japan, where the 12-year battle fought by the banking sector against negative interest rates would seem to be ending as that easy money regime draws to a close. China was a notable absentee from the party: A fraught property sector shredded sentiment.

Last year, the global banking industry showed greater cost efficiency and improved asset quality. Still, the direction of travel will be determined by economic growth; central bank base rate moves, particularly from the US Federal Reserve; the demand for credit; and the pace of loan delinquency.

As the cost of capital came into focus and banks looked to shrink cost-to-income (CTI) ratios, the industry shed 60,000 jobs globally last year, the highest tally since the crisis. Investment banking fee wallets collapsed as deal-making and listings shriveled.

At the same time, traditional bank lending faced the threat of a thriving private credit market engineered by the nonbank financial sector. Leveraged buyout funds were more likely to be supplied by a large hedge fund than a big bank and at more competitive rates.

Environmental, social, and governance (ESG) issues remained a dominant theme: in Europe as a total belt-and-suspenders operational input thanks to the tightening of the regulatory straitjacket, and in Asia as companies and banks played catch-up in the sustainability game during the start of an ESG-focused regulatory convergence manifesting in the region.

Sustainable finance dominates across the financing spectrum globally, whether in transition format, which dominates in Japan, or the full-on green/impact issuance typical in Europe and the US and burgeoning in Asia-Pacific, excluding Japan.

In Europe, banks had their most profitable year on record, thanks to the NIM effect, resilient asset quality, and low CTI ratios. Bank for International Settlements capital-requirement metrics were in rude health, with more capital returned to bank shareholders last year than at any other time since the crisis.

In the Asia-Pacific (APAC) region last year—as in 2022—net interest margin (NIM) dynamics were optimal for banks in Southeast Asia, Australasia, Hong Kong and India. Lending rates followed central bank tightening moves, while deposit rates lagged; and across the region, there were some record profits.

In Japan, profits at the country’s five most prominent banking groups leapt 56% to a record ¥2 trillion (about $12.6 billion) in the fiscal second half as lending spreads widened.

By contrast, China’s banking system suffered from weak loan demand as the property crisis weighed on sentiment, and NIMs contracted for a second consecutive year.

Meanwhile, according to an International Data Corp. survey, most banks across APAC increased 2023 tech budgets to boost security, transform data and avoid downtime. Over 70% of banks in APAC expected environmental, social and governance (ESG) initiatives to boost profitability—albeit a challenging measure to acquire.

UOB has focused its growth strategy on ASEAN. Its expansion into the region via the $5 billion Singapore dollars (about $3.7 billion) acquisition of Citigroup’s regional consumer banking business in 2022 bore fruit in 2023, more than doubling its customer base outside Singapore.

The move aligns UOB, which also won the Best Bank in Singapore, with ASEAN’s rise as an economic powerhouse, rapidly transformed via megatrends like supply chain diversification, digitalization and investments in net-zero transitions and a rising middle class.

Last year, UOB fully integrated its acquired Indonesian and Malaysian businesses onto the bank’s platforms while the migration of the Thai and Vietnamese businesses will be completed in the first half of 2024 and 2025, respectively. In 2023, the bank’s financial data metrics were impeccable: a 27% increase in net profit to a record S$6.1 billion; a 2.3% rise in return on equity (ROE) to 14.2%; and gains in tier 1 equity capital and assets of 5% and 4%, respectively.

The Citigroup acquisition bore immediate fruit in the e-payments line, with 25% growth in customers in ASEAN, 26% growth in transaction value to S$129 billion and the capture of 40% market share in Malaysia via the DuitNow e-payment corridor and 60% in Thailand via PromptPay.

China’s banks faced a challenging 2023 due to feeble retail and mortgage loan demand, policy initiatives directing cut-rate lending to strategic sectors, and dwindling NIMs, which fell 22 basis points (bps) over the year, extending 2022’s decline.

Against this inauspicious backdrop, China Construction Bank (CCB) impressed judges with an array of initiatives demonstrating innovative technological thinking and a keen eye on ESG alignment, regional development and inclusivity.

Given the turbulent domestic property market, a particularly savvy initiative involved closed-loop services aimed at improving China’s rental-housing environment. CCB invested 4.9 billion renminbi (about $676 million) under its Housing Rental Fund; and via the CCB Home long-term rental program, the bank’s corporate lending to the rental sector exceeded 300 billion renminbi.

Digital capability led to an upgrade of the CCB Huidongni app, which provides inclusive loans, boosting this portfolio of offerings by 22% to 2.9 trillion renminbi. Rural revitalization was facilitated via the Yunongtong app, which provides basic financial services to farmers.

Meanwhile, HSBC had a banner year in Hong Kong, raking in $24.6 billion after-tax profit versus $8.3 billion in 2022. This was primarily based on revenue growth, which registered a heady 30% rise, allowing the bank to distribute its highest full-year dividend since 2008.

In the culmination of a four-year cost-to-achieve program, the bank eliminated recurrent resturcturing cost and reduced operating expenses by 2%.

Rising external interest rates, a weak economic recovery and risk management challenges put neighboring Macau’s banking environment under pressure. Nonperforming loans (NPLs) surged from 0.26% before the pandemic to 3%—a complex backdrop that demanded transformative action from ICBC (Macau).

In response, the bank focused on long-term sustainable development, transformed its operations, compressed its asset scale, optimized its liability structure and boosted noncredit profit lines.

Provisioning costs hit profits, but ICBC’s strategy of “basing on Macau, integrating into the Greater Bay Area, expanding in Portuguese-speaking countries and extending to the countries along the Belt and Road route” remained intact.

Taiwan’s E.Sun bank stunned last year with profits of $21.7 billion Taiwan new dollars (about $665 million), for a 38.1% gain, all the more impressive for being achieved by an 11.6% rise in fee income (to NT$21.5 billion), which broke the bank’s all-time quarterly record in the final quarter of 2023, when it booked a hefty NT$5.8 billion in fees.

The bank’s offshore business expansion also saw a massive return, as overseas profit surged 102.9% and contributed 35.8% of E.Sun’s overall profit.

Japan’s banks benefited from rising NIMs in dollar loans last year. At the same time, margins improved on longer-term yen loans thanks to the Bank of Japan (BOJ) easing caps on the 10-year Japanese government bond in its yield curve control program. The NIM at Japan’s three largest banks hit 56 bps, the highest since the BOJ started its negative interest rate regime in 2012.

Banking colossus MUFG Bank reaped ¥80 billion to its profit and loss statement from a bumper year at its domestic affiliates, including Morgan Stanley securities operations, where combined profits hit ¥381 billion in fiscal 2023. The company also benefited from a 33 bps increase on overseas lending spreads, principally in US dollar funding. Net operating profits across the group in the year to September rose 16% to ¥1.8 trillion.

MUFG demonstrated a solid commitment to shareholders last year. The group’s market capitalization in 2023 was at a 17-year high, valuing the enterprise at around the same level in dollar terms as Goldman Sachs.

Meanwhile, South Korea’s Hana Bank delivered a 34% gain in net income in fiscal 2023, with a notable 15.4% increase in fee income. In addition, it benefited from improved net lending margins thanks to the Bank of Korea’s base rate-tightening campaign.

Hana has led the way in Korean banking’s funding alternatives to the deposit base, with frequent issuance in the international debt capital markets. Last year, it innovated by visiting the euro market via a €600 million (about $642 million) covered social bond, building on US dollar issuance over the previous two years in a sustainability-linked format. This underscored Hana’s commitment to ESG alignment, the bank having joined the Equator Principles in 2021 and the Net-Zero Banking Alliance in 2022.

The post-Covid recovery went gangbusters in the Australian banking sector last year. KPMG Australia reported that the “Big Four” banks generated 32.5 billion Australian dollars (about $21.2 billion) in profit, for a 12.4% year-on-year (YoY) gain.

The country’s largest lender, Commonwealth Bank of Australia (CBA), led the pack with the biggest profit—a record AU$10.2 billion—besting the other three significant lenders (NAB, ANZ and Westpac) by around AU$ 3 billion each. NIM rose in the first half by 23 bps to 2.1%, and earnings growth‚ unsurprisingly, was driven by a 19% increase in net interest income. Volume growth was recorded across CBA’s product suite including home loans—which it dominates, providing 25% of retail mortgages in the country—and business loans.

CBA struck a cautious tone in its 2023 annual report, noting a rise in loan delinquencies. Still, shareholders had reason to smile: In August, it announced an AU$1 billion share buyback and paid a final dividend of AU$2.40 per share for a record annual AU$4.50 payout.

Meanwhile, ANZ New Zealand had a bumper year, but also stuck a cautious tone.

Despite going from the Covid fiscal stimulus tailwind to a series of rapid interest rate increases from 2022 to 2023, the bank achieved 2.3 billion New Zealand dollars (about $1.4 billion) in cash profit for fiscal 2023—a 10% YoY gain. Revenue rose 10% and home lending by 3%; but provisioning against sour loans increased, and profits fell 22% in the final quarter as NPLs rose above NZ$1 billion.

Demand for consumer loans propelled Indian banks’ loan portfolio growth into double digits last year. The State Bank of India (SBI), the country’s largest asset lender, reduced its recent focus on the retail segment for baseline expansion and turned its attention to corporates.

Overall loan growth was 15% last year; but the days of 30% to 33% annual unsecured retail loan growth ended, being crimped to 18% while corporate lending filled the gap.

The bank has an auspicious ratio of current account savings accounts (CASA) and focused last year on the cross-selling product opportunity afforded by its 22,400-branch network. SBI continued to reduce NPLs, reducing its gross nonperforming assets ratio by 72 bps, to 2.42%

Pakistan’s Habib Bank, the country’s oldest commercial bank, scored its highest-ever profit in 2023, pulling in 57.8 billion Pakistani rupees (approximately $208 million), a 68% surge.

Assets and deposits both hit record growth—each up by 19%—and all of the bank’s product offerings, including consumer loans, agriculture lending and microfinance, hit new benchmark highs. The lending margin backdrop was turbocharged by rising central bank policy rates, surging 159 bps. In contrast, fee income rose 34%, mainly on the back of HBL’s cards business, which dominates retail consumer credit in the country.

According to its website, the vision of the Commercial Bank of Ceylon (CBC) is “to be the most technologically advanced, innovative and customer-friendly financial services organization in Sri Lanka.” This might have proved challenging during the past few years of economic turmoil, but CBC is on its way.

In 2023, its tech-driven new product offerings impressed, particularly the Commercial Bank LEAP GlobalLinker, a pioneering scheme to create a digital business ecosystem in the country, aimed at small and midsize enterprises (SMEs). At the same time, CBC grabbed the most market share for deposits and loans in Sri Lanka and grew its ESG footprint with schemes such as collaboration with the Green Building Council, which will promote sustainable construction in the country.

Nepal’s Global IME Bank (GIB) serves 4.6 million domestic customers and focuses 55% of lending on the retail and SME segments. GIB has interests in hydropower, manufacturing, textiles, services, aviation, exports, trading and microfinance. It was the first handling bank unit of the Central Renewable Energy Fund. Its ESG credentials were further burnished by establishing a disaster recovery system in natural disaster prone western region of Nepal, about 125 miles west of Kathmandu.

Standard Chartered Bangladesh (SCB) has been serving the country for 119 years. It has facilitated investments in power, energy, transportation and urban development, with a keen eye on lending to the SME sector, It is the country’s only universal international bank.

An eye-opening innovation unveiled last year was the first-ever end-to-end digital cross-border letter of credit, which was utilized by Heidelberg Cement Bangladesh and was made possible by an amendment to Bangladesh’s Import Policy Order. Moreover, SCB arranged the first private sector “recourse” financing to help reduce greenhouse gas emissions in the country’s steel industry via solar power generation, air pollutant management systems and water treatment.

Malaysia’s Maybank is galvanized around its M25+ action plan, which aims at revenue diversification and operational efficiency while keeping a sharp eye on meeting sustainable goals. The bank operates around its pioneering Group Transition Finance Framework. In 2023 it received the highest rating in the Carbon Disclosure Project among local peers, scoring a B versus the Asia regional C rating.

Maybank’s 60 sen (about $0.13) dividend was the highest payout since the pandemic. Meanwhile, its ROE rose from 9.6% to 10.8%, and net profit grew 17.5% to 9.35 billion ringgit (about $2 billion).

In neighboring Brunei Darussalam, Baiduri Bank reported a blowout of 15.8% ROE, a 24% surge from the previous year. The operational efficiency required to achieve this stunning metric was made plain in the bank’s supertight 38.2 cost-to-income ratio, which squeezed in by 23%. Total assets grew 11.5%, and net profit surged 37%.

The bank trod new paths, including its presence in overseas syndicated loan groups and via innovative strategies from its treasury team in asset and liability management, focused on overseas financial markets, especially its neighbor Singapore.

Bangkok Bank (BBL) booked a handy 42% rise in profits in 2023 for 8% ROE, an impressive result given the bank’s relatively cautious lending stance: Its loan-to-deposit ratio was 84%, versus around 107% for the Thai banking system.

Thailand’s largest commercial bank, BBL has led, managed and participated in public debt issuance across the entire spectrum, from plain vanilla to structured and ESG-compliant debt.

The bank also rolled out game-changing products during 2023, including PromptBiz, an e-payments corridor that is part of the Bank of Thailand’s national digital service, and a digital-lending pilot project for microenterprises that utilizes digital data and end-to-end digital approval.

Higher NIMs and improved asset quality—which boosted non-interest income—allowed the Philippines’ Metropolitan Bank and Trust Co (Metrobank) to book a 29% gain in attributable net profit last year, with earnings surging 39% in the third quarter.

Metrobank kept costs low last year, reducing its cost-to-income ratio by more than 3% to 51.5%. Its trading and foreign exchange departments scored a 45.5% gain, booking 3.6 billion pesos (about $62.4 million) in trading profits.

Indonesia’s Bank Mandiri focused on corporate credit growth last year, increasing its loan portfolio in the segment by 18.3% to 490 billion Indonesian rupiah (about $30.2 million). The micro, small and midsize enterprise segments grew by 14% and 10.4%, respectively, and overall asset quality at the bank improved. NPLs fell by a chunky 86 bps to just 1.02% and are covered by 384%.

The bank also recorded the highest profit in its 25-year history, 55 trillion rupiah ($3.5 billion), for a 33.7% gain over 2022.

Vietnam’s Techcombank acquired 2.6 million new customers last year— double 2022’s customer growth. In the process, it boosted deposits by 26.9% and total credit assets, including loans and credit card assets, by 19.2%. The healthy deposit dynamic at the start of the year continued into the final quarter, with CASA rising to 40%. Vietnam’s cutthroat banking market softened Techcom’s asset yields with competitive loan pricing. However, after contracting in the first three quarters, its NIM expanded by 11.4% in the third quarter, which allowed pretax profits to rise 22% in 2023.

Advanced Bank of Asia (ABA), Cambodia’s largest commercial lender, wholly owned by the National Bank of Canada, increased profit by 5.4% in 2023, pulling in $276.5 million. Wholesale and retail trade loans dominated ABA’s loan portfolio, with the rest lent to the services sector, real estate, construction and manufacturing. Total asset value grew 27% over the year, and the bank continued to restructure loans that had become nonperforming during the pandemic.

Myanmar’s UAB Bank scored an eye-popping 17% ROE in 2023 and managed to subdue NPLs to 6%. UAB has become a model within the “S” of ESG, demonstrating corporate empathy within a country still reeling from the effects of the 2021 military coup. It has organized campaigns to donate rice, funded orphanages and monasteries, provided scholarships for the underprivileged, sponsored sporting and artistic talent and organized excursions for the elderly, all under the slogan “No one is left out.”

Afghanistan International Bank (AIB), one of the country’s largest commercial banks, enjoys its unique status as the country’s only US dollar clearer—with the ability to transfer internationally without country restriction—and as a conduit to multilateral lenders and nongovernment organizations. After-tax profit in 2023 was 1.3 billion Afghan afghanis (about $18 million), a 29% YoY gain.

Mongolia’s Khan Bank outpaced the competition in 2023. Its 424 billion tugrik (about $125 million) profit exceeded the combined earnings of the country’s four other large banks. This  was an impressive result given the expiration of the no-interest clause on demand deposits and current accounts that had been introduced due to the Covid-19 pandemic.

Roughly 1.7 million of Mongolia’s population of 3.5 million people use the digital platform from Khan Bank, and AI automation has helped streamline 10 processes across the application. This includes a digital signature feature that massively reduces paper usage and helps the bank become more eco-friendly.

Kazakhstan’s ForteBank—the country’s fifth-largest lender in terms of assets—enjoyed a one-notch long-term-issuer upgrade from Fitch Ratings in August to BB. Fitch cited the bank’s “intrinsic credit strength” and the reduction of its NPLs from 13% at the end of 2021 to 9% at the end of the first half of 2023.

Pasha Bank, Azerbaijan’s largest private bank by total equity, booked an extraordinary 510% profit gain last year via its diversified operational model, which includes investment banking, trade finance and asset management for businesses ranging from SMEs to the largest corporations. In 2023, the bank leveraged its 8.9 billion manat (about $5.2 billion) in consolidated assets to post industry-beating profits.

Tenge Bank, a subsidiary of preeminent Central Asian lender Halyk Bank, has made rapid progress since its start in 2019. It covers 90% of Uzbekistan country’s population via 17 branches and through its mobile app, Tenge24, which added online account opening and virtual card issuance in 2023.

Meanwhile, Halyk Bank Kyrgyzstan, a universal bank, provides financial services to large corporations, SMEs and retail customers. Since opening its doors, it has built up correspondent relationships with large banks in Germany, Russia, South Korea and Kazakhstan and serves the population via 19 branches. Kazakh parent Halyk Bank sold the bank last year to a consortium of buyers led by Visor International, an investment group with interests in Central Asia.  

The future path of ESG though, may well depend on choices made by the rest of the world, and particularly Asia. Why Asia? Although its per capita emissions are below those of the US and EU, the populous Asia-Pacific region (APAC) is currently a massive carbon producer. Asia is also rapidly becoming a pivotal player in the search for solutions to the climate crisis, and has the resources to achieve it.

“China and India produce one third of the world’s carbon emissions; the former makes over 60% of the solar panel supply and owns the bulk of the rare earth minerals required to manufacture EV batteries,” notes Drew Bernstein, co-chairman of accounting firm Marcum Asia. “Moreover, the region feels the effects of global heating more than anywhere else.”

Africa is certainly pinched between its huge burgeoning energy needs and massive financing gap. Latin America, grounded in agriculture, is investing in sustainable transition, but is a relatively small part of the world economy. By contrast, APAC is the behemoth, anchored by the mature economies of Japan and Australia and primed for future turbocharged growth by the Association of Southeast Asian Nations (ASEAN), which is forecast to be the world’s fourth-richest economic bloc by 2030.

Although its per capita emissions are below the US and EU, populous Asia is currently a massive carbon emitter, generating 17.2 billion metric tons of carbon dioxide via energy production in 2021 (51.2% of the global total), versus 4.5 billion from the US (13.6%) and 3.7 billion in Europe (11.1%), according to the International Energy Agency.

Asia’s wide range of economic development—from frontier markets such as Vietnam to the highly developed economies of Singapore and Japan—means that while the region’s energy and growth needs are significant, it also commands the wealth needed to finance change. Furthermore, cultural expectations in most Asian countries lean toward a strong role for governments in corporate affairs—and for stakeholder-capitalism approaches that seek long-term stability through balance among the needs of employers, employees, customers, citizens and even nature.

“We’re keenly aware of the growing importance that regulators, customers and stakeholders—including banks—place on ESG, climate change, and carbon emissions, in both managing risks and identifying opportunities,” says Gopul Shah, director of corporate treasury and structured trade finance at Singapore-based Golden Agri-Resources, (GAR) a regional agricultural giant specializing in palm oil. “There’s now a clear expectation for companies like GAR to disclose, comply, or explain what we’re doing in critical areas such as sustainable sourcing practices, investments in traceability or mapping and mitigating our carbon emissions.”

Together, these factors are making themselves felt on three fronts: a wave of new and more aggressive environmental reporting regimes across the region, a lively fintech business facilitating reporting connected to the new regulations, and a growing and innovative market in sustainable finance.

Thus far, the approach that Asian governments and corporates are taking to the business of sustainability resembles the European model more than the American. Consider Singapore and Hong Kong. Five years ago, lax environmental regulation and disclosure were among the attractions of these economies. Now, ESG regulation in both is tightening to meet international guidelines. Yet, the two jurisdictions continue to attract corporate interest as bases of operation and corporate treasuries, both from multinationals outside the region and from within APAC.

In fact, these two are effectively leading the ESG regulatory wave that is beginning to sweep the region. In North Asia, Japan is slated to adopt new sustainability disclosure rules by March 2025 consistent with criteria set by the International Sustainability Standards Board (ISSB). China’s three main stock exchanges—Beijing, Shanghai, and Shenzhen—recently unveiled new sustainability reporting guidelines that will require hundreds of large and dual-listed companies to disclose ESG-related information, including energy use, climate change, ecosystem and biodiversity protection, and supply chain security, starting in 2026.

“Mandatory reporting is expected to significantly impact Chinese companies, pushing them to prioritize and transparently report on their sustainability efforts,” says Polly Milne, project director at the Sustainability Group consultancy, based in London. This amounts to “a significant step towards increased corporate transparency and environmental responsibility that will align China with ESG disclosure rules in other countries, including the UK, Australia and Singapore.”

To be sure, not every jurisdiction is proceeding at the same pace. South Korea’s Financial Services Commission announced late last year that it was postponing mandatory ESG disclosure rules for listed companies until 2026 or later, citing delays in the US and other countries and requests from the Korean business community for more time. But new rules are coming nonetheless, initially for companies listed on the Korea Composite Stock Index that have more than 2 trillion South Korean won (about $1.5 billion) in assets.

But the US, where legislation under consideration excludes Scope 3 (supply chain) emissions, is looking more like a global outlier. “The international standard for ESG reporting is the ISSB, which includes Scope 3 emissions reporting as mandatory,” explains Benjamin Soh, co-founder and CEO of regional ESG-focused fintech Stacs. “In Asia, regulatory reporting will be adopted according to this standard for all listed companies.”

In measuring progress and meeting such goals, Asia benefits from a leading edge in technology—environmental as well as financial technology. Hong Kong-based Intensel, for example, uses satellite imagery and big climate and asset databases to provide real-time portfolio analysis.

Another entrant is ESGpedia, a digital platform developed by Stacs, a Singapore-based data and technology company that aims to bolster several green and sustainable-finance efforts, including ASEAN’s Single Access Point for ESG Data, a digital one-stop shop for corporate sustainability information; and the Monetary Authority of Singapore’s Greenprint ESG Registry, a blockchain-based network that is part of a wider effort “to harness technology and create a data-centric ecosystem to support the financial sector’s sustainability agenda.” As sustainability-focused regulations roll out across Asia, tools created by companies like Intensel and Stacs are expected to play a key role facilitating compliance.

As this suggests, APAC is also expected to drive the next stage of growth in sustainable finance, which has surged from less than $100 billion in 2015 to $4.6 trillion worldwide in 2022, according to Precedence Research, which predicts 20% annual growth for the market through 2032, when it could reach $29.1 trillion. “Much of that growth will come in [APAC] as it catches up with Europe and North America and, in some areas, overtakes them,” Societe Generale predicted in a January research note.

Investment bankers and institutional investors in the region expect the new environmental reporting regimes to reinforce North Asia’s existing preeminence in green and impact bond issuance and spawn a new boom in sustainable issuance in East and Southeast Asia. For Asia’s CFOs, challenges and opportunities abound: The former involve meeting a rising level of government regulation aligned with ever-converging regional green taxonomies; the latter involve an increasingly deep and sophisticated sustainable loan, bond and derivatives market.

Cross-border issuance within Asia gives corporate treasurers the opportunity to diversify their investor base while tapping a growing sustainable-funding market. In March, CapitaLand Investment (CLI), a Singapore real estate firm, issued its inaugural sustainability-linked Panda bond, with a three-year tenor at 3.5% per annum, raising one billion renminbi (about $138.7 million), the first such from a company based in the city-state. The deal was 1.65 times oversubscribed, indicating a strong underlying demand for sustainability-linked debt from Chinese investors.

Meeting key performance indicators (KPIs) linked to the interest rate on a loan or bond can deliver substantial bottomline benefits, the discount depending on the market, the bank and the corporate making the deal. “In Asia’s emerging markets, the discount could be as high as 25 basis points per annum,” says Stacs CEO Soh. “You’re saving a lot of money down the road.”

Another advantage of sustainability-linked issuance is that funds can be used for refinancing purposes. In the CLI deal, coupon payments are linked to a reduction of CLI’s energy consumption intensity at its properties in China, targeting a 6% decline.

These benefits are key for RGE, a Singapore-based, privately held multinational with global assets valued at more than $30 billion. RGE has business segments in palm oil, pulp and paper, viscose fiber, and energy provision. “To drive real sustainability impact and ensure that all our businesses have skin in the game,” says Patrick Tan, RGE’s head of banking, “we have committed 100% of our financing to sustainability-linked loans (SLLs).” Proceeds will support the growth of the company’s core businesses as well as its expansion into new initiatives such as sustainable aviation fuel. “SLLs are ideal for us as they are aligned to our DNA as well as our businesses’ sustainability goals,” Tan adds. “In 2023, we issued around $1.14 billion in SLLs and we expect to seek a similar or bigger funding amount this year to support our growth.”

From an issuer’s point of view, sustainability-linked bonds (SLBs) carry another attraction: callability. According to an International Finance Corporation February 2023 report, 65% of the outstanding global corporate SLB market is likely to be called, versus 23% of green bonds—with 69% tied to reduction of greenhouse gas emissions, followed by increased use of renewable energy—and step-ups for missing ESG-linked KPIs are relatively low, at a 25 basis point average.

“Issuers recognize the need to establish green credentials or risk being locked out of capital markets. However, not every issuer has eligible green assets that can be tagged to use-of-proceed instruments like green bonds,” says Clifford Lee, global head of Investment Banking at DBS. “SLBs play a critical role in bridging that gap by supporting companies as they undergo the green transition.”

The lack of standards for ESG factors in business remains a point of contention. GAR illustrates why: The company has been an early adopter of standards set in Singapore and has started implementing international Taskforce on Climate-related Financial Disclosures (TCFD) recommendations and reporting Scope 3, land use and forestry emissions. Do those efforts earn it high marks? Depends whom you ask. A- from Refinitiv, BB from MSCI and High Risk from Sustainalytics.

Elsa Pau, founder and CEO of Hong Kong-based BlueOnion, a fintech company that promotes responsible investing, argues that the diversity of views is healthy: “Different ESG ratings agencies look at companies from fundamentally different perspectives.”

Others, like Karl Schmedders, professor of finance at IMD business school in Lausanne, complain that inconsistency masks the compromises in the business model: “Why do the agencies that provide those ratings get involved? They in essence want to make money, and the enterprise enables greenwashing.”

Here, banks may be able to lend help to corporate clients as arbiters and assessors. “For commercial banks, ESG ratings serve more as a point of reference,” says RGE’s Tan. “For corporates that are transitioning to a greener future, banks may be better equipped than a standard set of ratings to dissect and identify factors that move the needle.”

As DBS’ Lee notes, ESG ratings can be useful in demonstrating a company’s adherence to ESG principles and exposure to ESG risks. However, as ESG ratings remain in an evolving stage of development, many companies continue to rely on their respective ESG financing frameworks to showcase ESG plans to investors.

“While banks expect sufficient ESG transparency from their clients to ensure they can address climate change or transition risks and opportunities, this is still one among many factors that lenders consider,” says GAR’s Shah. “Corporate credit rating, business risk and management profiling, cash flow, industry risk, governance and relationship history continue to remain primary considerations for lenders.”

Those figures have burnished the reputation of Prime Minister Sheikh Hasina, daughter of the nation’s founder and in power since 2009, who has championed the country’s textile industry as a powerful growth engine.

All has not been smooth sailing for the net oil-importing nation. Last year, rising fossil fuel prices increased inflation, shaving 1% off 7% forecast growth and creating a balance of payments crisis that led to intervention by the International Monetary Fund (IMF). But the country’s long-term growth trajectory remains intact.

When the country experienced an unprecedented reversal of its financial accounts last year, leading to a deterioration in the balance of payments and consequent pressure on Bangladesh Central Bank’s foreign exchange reserves and the taka, the bank, under program guidance from the IMF, tightened monetary policy, allowed greater exchange rate flexibility. 

“Due to active intervention by the central bank, there has been some convergence of formal and informal exchange rates for the taka,” says Salim Afzal Shawon, head of research at BRAC EPL, a Dhaka stock brokerage. “Whereas we have seen different formal and informal rates with as high as a 14%-plus gap in between, it has narrowed a bit recently, with some sign of steadiness, which should help improve onshore dollar liquidity.”

A wild card is Bangladesh’s high-risk exposure to climate change; the 2021 Global Climate Risk Index Report ranked it seventh among countries most affected by climate change between 2000 and 2019. That vulnerability may be a developmental capital blessing in disguise.

In December, the government established its Bangladesh Climate and Development Platform (BCDP), a collaborative initiative and the first of its kind in Asia, spearheaded by the Asian Development Bank and World Bank, aimed at mitigating and adapting to the effects of climate change and involving the participation of multilateral development banks and other bilateral partners—12 in total—including the Green Climate Fund.

The BCDP will “generate a robust pipeline of climate projects, integrated with a financing strategy” and the initiative aims to attract private capital via risk mitigation and direct funding, according to an IMF prepared statement. The initiative includes a Project Preparation Facility, which aims to coordinate development partners and support scalability in order to attract private investment.

In 2022, the top 10 largest private banks in the Asia-Pacific region (APAC) saw their assets under management (AUM) decline by $209 billion (11.7%) amid a turbulent year for global capital markets.

However, according to estimates from Accenture, AUM has rebounded this year as private banks compete for a share of Asia’s estimated $216.6 trillion of investor wealth, with $20.9 trillion held by ultrahigh net worth investors.

Advisory capability and the ability to navigate volatile offshore and onshore markets with asset selection are more crucial than ever. APAC private banks aim to more than double AUM and grow revenue by more than 60% by 2025.

APAC private banks are increasingly relying on “phygital” (hybrid physical and digital) relationship managers (RMs), who use artificial intelligence (AI) to optimize advisory services, boost revenue, and reduce cost-to-income ratios. This approach allows RMs to serve more clients more efficiently than standard physical models.

DBS Private Bank excels in Singapore’s shifting financial landscape, with a substantial 76% of recent client growth coming from international clients across the globe. The bank’s exceptional metrics include a 20% rise in total income for 2022, driven by record net new money inflows and one of the industry’s lowest cost-to-income ratios, at just 46%.

The bank actively participates in Singapore’s thriving single-family office (SFO) boom, attracting many SFOs established in the city-state. Additionally, DBS has introduced a multifamily-office structuring proposition that leverages Singapore’s variable capital company regime.

Clients monitor portfolios and receive AI-powered insights through the DBS digibank – wealth app, with an impressive 90% of clients using it to trade 24/7. Contrary to regional trends, the bank also expanded its RM pool by 5% in 2022.

DBS’ unique “one-bank” proposition harnesses its commercial and investment banking capabilities, offering business owners access to Singapore’s economic success story through local expertise and connections.

The private bank’s phygital approach combines RM expertise with data analytics, AI, and machine learning to redefine the client experience. RMs receive AI-guided “nudges” for client engagement, leading to increased adoption of wealth planning solutions. These nudges are delivered through the DBS digibank – wealth app, with 90% of clients actively using it to monitor portfolios and trade.

Like its APAC counterparts, Westpac Private Bank has witnessed growing demand for investment products aligned with environmental, social, and governance (ESG) concerns, especially from its millennial client base. The bank addresses this demand with a thematic approach, offering tailored investment opportunities typically reserved for institutions that cater to private bank clients.

For instance, the Global Energy Transition theme focuses on wind and solar energy and battery assets, emphasizing capital preservation and consistent cash flow generation.

In sustainable investing, Westpac Private Bank stands out as the first major Australian retail broker to introduce ESG risk ratings for individual companies, a collaborative effort between Westpac’s Private Wealth product development team and Sustainalytics. These ratings enable clients to assess the economic impact of ESG factors on companies.

Tailoring offerings, services, and performance to cater to a diverse clientele ranging from those with established fortunes to emerging tech magnates and the next generation demands a blend of expertise and vision. It also requires an ability to see past headwinds and help clients plot a long-term course.

This year has been a singular year for private banking, as providers watched the almost simultaneous fall of one of the largest private wealth managers in history, Credit Suisse; and one of the most innovative, Silicon Valley Bank (SVB). Despite which, the industry has shown resilience as historical powerhouses such as J.P. Morgan, UBS, Deutsche Bank, Citi, and Bank of America stepped up to prevent a financial crisis in the wake of the collapse of SVB, Signature Bank, and First Republic Bank—later reaping the rewards, increasing their clientele, staffing, and structural capacities.

Moreover, J.P. Morgan Private Bank kept improving its offerings and global presence. This year, it opened a new US Family Office Practice and added to its teams in Asia and Latin America while making changes in upper management in both regions.          —TM

Westpac Private Bank acts on the belief that commitment to diversity begins at home. The Australian market leader has set specific targets for gender representation within its leadership ranks, with the aim of filling 50% of leadership positions and at least 40% of board seats with women.

In March, the bank introduced a set of initiatives to support female entrepreneurs as part of its 500 million Australian dollar (about $318 million) commitment to women in business. The initiatives include offering startup loans of up to AU$50,000 with a three-year tenor and providing scale-up loans of up to AU$1 million to assist existing businesses in their growth, also with a three-year tenor.

“Boosting women’s entrepreneurship in Australia is important to the economy,” said Chris de Bruin, who has since stepped down as group chief executive of consumer and business banking, in commenting on the initiatives. “The longstanding gender pay gap represents a missed opportunity for innovation, social and economic value creation, and job creation.”          —Jonathan Rogers

DBS initiated its digitalization journey in 2014, with the aim of developing artificial intelligence (AI) and machine learning models and utilizing cloud and open-source technologies to facilitate a transformation into a fully digital bank.

Since then, the Singapore-based bank has achieved several breakthroughs in the field, reducing costs by 30 million Singapore dollars (about $22 million) while increasing revenue by SG$180 million.

Among the most important developments are an internal self-service AI platform, an AI protocol, and a knowledge repository, enabling rapid AI deployment at scale. DBS’ integration of its relationship management systems with AI, referred to as the “phygital” (hybrid physical and digital) dynamic, has also played an important role in delivering optimal client service to its private banking clients.    —JR

Having been the top-rated bank on the Dow Jones Sustainability Europe Index three years in a row, BBVA is an undisputed global leader in the field. The Spanish giant’s success rests on two pillars: alignment of all loans and investments with the Paris Agreement and a comprehensive range of sustainable products and services for the bank’s clients.

BBVA offers a family of sustainable mutual funds whose managers are committed to impact investing. It also constantly monitors the environmental, social, and governance (ESG) credentials of third-party funds through its proprietary Quality Funds platform. Sustainability-risk information goes digitally to private banking clients in compliance with the EU’s Sustainable Finance Disclosure Regulation. Finally, to ensure that its clients have confidence in its commitment, BBVA now requires all of its private bankers to hold an external sustainability certificate. —Jonathan Gregson

BTG has built an investment-solution ecosystem that aims to meet all of its wealth management clients’ medium- and long-term goals with an integrated, one-stop-shop approach. The platform leverages cutting-edge technology and up-to-date analytical information, enabling BTG’s team to upgrade clients’ financial experience into a user-friendly, easy-to-navigate environment.

One of the main features is constant dialogue with clients over their developing needs. For this, BTG focuses on three vital aspects: recruiting and nurturing top professionals for the front, back, and middle office and product areas; deepening its understanding of clients’ financial needs and objectives; and staying ahead by anticipating global and local market opportunities, especially during challenging periods.            —Estela Silva

Reliability, investment performance, and tailor-made solutions are requisites for high net worth (HNW) and ultrahigh net worth individuals (UHNWI) shopping for a private bank. Banque Richelieu Monaco, which takes home our award this year as Best Boutique Private Bank in the World, checks all of these boxes, along with above-average staffing and growth of assets under management (AUM).

With nearly 40% of its AUM base landing in the UHNWI category, Richelieu maintained its focus on offering rapid, tailor-made decision-making, enabling clients to navigate wealth management seamlessly. It was rewarded with stellar growth this year, as AUM grew 17% and net profits an impressive 47%.

Richelieu’s strategic focus encompasses markets including Monaco and other European countries, which account for 60% of AUM; while Africa, Asia, the Middle East, and the US account for the rest. Nonetheless, it has kept on building foreign partnerships, notably with Banque Richelieu GCC in Cyprus and Abu Dhabi. A recent collaboration with banking and wealth management software developer ERI has enabled the bank to improve efficiency and upgrade its technology offerings, improving client service.  —TM

Hana Private Bank has made a name for itself as an innovator by offering new digital assets, accessible and manageable on Hana’s 1Q Bank app, to its HNW clients. The new products include security token offerings and fractionalized stakes in blue-chip artworks by artists such as Picasso, Warhol, Kusama, and Basquiat using nonfungible tokenization backed by blockchain technology.

The South Korean bank established Hana Art Bank in July 2023 in alliance with an alternative investment platform company to appeal to “microcollectors” via fractional ownership.

Hana teamed with KPMG in February to launch two more new offerings: succession planning services, including valuation and M&A advisory; and a private community linking younger HNWIs with CEOs for networking and business-opportunity creation.          —JR

J. Safra Sarasin sees sustainability as the most critical aspect of its approach to socially responsible investment. The Swiss private bank has closely integrated two key sets of standards: the Paris Agreement on climate change and the UN’s Sustainable Development Goals. Both are embedded in Safra’s corporate strategy and core investment offering.

Safra has been ahead of the curve since it launched its first sustainable investment mandate in 1989, and it has consistently directed resources to companies that embrace energy efficiency and decarbonization. A founding signatory of the UN Principles for Responsible Investing in 2006, Safra launched its own proprietary Sustainability Matrix more than 20 years ago and today requires that all of its mandates be sustainable. —JG

As the private banking world buckles up to help manage one of the most significant generational wealth transfers in history over the next couple of decades, BTG Pactual Wealth Management is working to stay ahead of the pack. The bank’s Future Leaders program is dedicated to preparing heirs for roles in shaping future legacies through comprehensive education in legal, economic, and tax aspects of estate planning.

Recognizing the pivotal role women will play in guiding the next generation of wealth management, BTG also offers Financial Journey–Women Investors, a financial education and leadership initiative aimed at helping participants make informed financial decisions and explore diverse investment strategies.     —ES

Managing approximately $1.3 trillion across the globe, Scotiabank has evolved into a powerful worldwide force. Since 2018, the Canadian bank has grown and diversified on the back of a series of multibillion-dollar acquisitions in areas including asset management and foreign exchange hedging.

Intergenerational wealth transfer and transition services are central to Scotia Wealth Management’s Enriched Thinking offerings. Scotiabank backs these up with the stability of its Canadian operations and its expertise across the globe. This helps entrepreneurs facing uncertainty in their home country to invest in more-secure markets.

A tailored fee structure helps Scotiabank to create a more customized practice with each of its business clients, backed by a five-year program that identifies customer needs and delivers solutions in one plan. Thanks to this approach, Scotiabank’s commercial banking business has seen sixfold volume growth in referrals over the past six years, to $13 billion.       —Nic Wirtz

Combining a deep knowledge of local markets with best-in-class global capabilities, Fifth Third Private Bank won high marks this year for service to entrepreneurs amid a volatile global economy. Its team of senior strategists, CPAs, and attorneys combined to produce a financial advisory offering that earned Fifth Third outstanding numbers in its customer satisfaction survey.

The bank continued to improve its tailored offerings to business owners. Last year, it partnered with a group of universities across the US on an exclusive survey aimed at understanding the strategies that middle-market business owners use in planning and executing transitions. The research yielded insights into the hurdles facing wealth managers in this market segment, particularly in the post-pandemic landscape, prompting further improvements in Fifth Third’s offerings.          —TM

With dedicated teams spread across Western Europe, Switzerland and the US, Santander Private Bank has expanded its client base of family offices by 16% over the past year to 3,090 families globally.

Recognizing the unique needs of UHNW clients, the Spanish-based bank recently introduced a team focused on offering a comprehensive suite of strategic investment banking solutions for family offices. Santander’s flagship Private Real Estate Advisory (SPREA) program helps UHNW clients identify promising investment opportunities and efficiently execute transactions. SPREA has dedicated teams in key regions, including Spain, the US, Portugal, Mexico and Brazil.

This strategic positioning allows the bank to tap into cross-border investment flows between the continents on which it operates. In 2022 alone, SPREA enjoyed 20% YoY growth in net revenue while overseeing €321 million (about $343 million) in total transaction value, underscoring its success in serving UHNW clients’ real estate investment needs.  —ES

Emirates NBD is becoming more and more of a global bank. The Dubai-based bank has developed a strong network in emerging markets from Africa to Asia, with a presence in Egypt, Turkey, Bahrain, Russia, Singapore, Indonesia and China.

In 2022, the bank opened two additional branches in India to complement its Mumbai offices. It also expanded its network in Saudi Arabia, the Middle East’s biggest market, with a booking center and 13 branches.

In these countries, Emirates NBD offers first-class private banking services but is also leveraging its ability to act as a bridge institution facilitating wealth transfers and providing investment solutions to large expatriate communities from the Global South.

Adapting to youth and new technologies, Emirates NBD also operates Liv, a digital bank, and just launched ENBD X, a new mobile app with an embedded digital wealth platform that allows clients to access over 11,000 global and regional equities with just a click.     —Chloe Domat

The initial success of this strategy is reflected in the bank’s excellent financial performance, which underscored the resilience of its balance sheet. Notably, the Federal Reserve’s annual stress test reaffirmed PNC’s financial strength and stability across economic cycles even while other banks faced difficulties.

As its rivals stuck to the basics, PNC focused on environmental responsibility and economic empowerment through private bank inclusion, committing more than $1 billion to bolstering African American–owned businesses in underprivileged communities and comprehensive sustainable investment offerings.     —TM

The Netherlands’ leading bank, which has long provided bespoke private banking-style services to its wealthier clients, recently lowered its entry threshold to €500,000. Given that this is by far the fastest-growing segment of the private banking market, the move has yielded healthy growth in a challenging year.

ING’s new cutoff point is part of a broader strategy of guiding existing clients into more value-added services. The bank currently fields a team of 450 advisers and investment specialists furnishing a full range of discretionary, advisory, and execution-only services to the rapidly expanding clientele.

The bank differentiates between clients, says Katja Kok, head of Private Banking and Wealth Management, Netherlands. The advice on financial planning and asset management needed by an individual with €5 million in assets is “perhaps even more relevant for someone with an invested capital of €500,000,” she says.      —JG

Bradesco Global Private Bank is working to grow its HNW and UHNW client base by focusing on the midmarket. To appeal to prospective customers with a net worth ranging from $1 million to $24 million, the bank is increasing its international offering, promoting better services for multinational Latin American fortunes.

Since 2020, that strategy has including acquiring other providers, including the Brazilian private banking operations of JP Morgan and BNP Paribas, further cementing its position with the country’s inbound transnational wealth.

It is also pushing into US market, building on its 2020 acquisition of Coral Gables–based BAC Florida Bank. Bradesco aims to bridge the gap for US-based Latin American customers in search of a trusted brand to manage their transnational fortunes.   —ES

Catering to one in four of the world’s billionaires—nearly 15,000 HNW and UHNW clients in over 130 countries, and more than 1,700 family offices—Citi Private Bank’s strong position helped it weather the year’s challenging conditions, including higher interest rates and geopolitical tensions.

As a division of Citi Global Wealth, Citi Private Bank maintains clear strategic priorities, focusing on the high end of the UHNWI market and clients whose net worth exceeds $25 million. That concentration helped the bank to achieve robust client growth in 2023, adding over 900 new clients representing a 21% increase over the previous year, a new record for the bank. The average net worth of Citi newcomers rose as well, by 12% to $450 million. That growth spurt gives Citi Private Bank a total of $461 billion in client assets, an 11% increase from 2022. Despite the adverse market environment, total revenue remained steady.         —TM

Z/Yen has produced the GFCI report in collaboration with the China Development Institute since 2007, drawing on data from organizations including the UN and the World Economic Forum to rate financial center competitiveness across categories ranging from telecomm infrastructure to regulation to human capital.

When Singapore first bagged Asia’s lead position in September last year, it was expected to be a one-off, given the imminent lifting of the Covid-19 lockdown imposed on Hong Kong. Now, there are reasons to believe Singapore will hold the top spot, not least its pre-eminent position as a hub for ASEAN, which is on a growth trajectory, as well as the island nation’s rising status as a center of wealth management and private banking.

“The difference between [Singapore and Hong Kong] remains slender, with only one point separating the two,” observes Heron Lim, economist at Moody’s Analytics in Hong Kong. More notable, he adds, “Singapore holds a persistent lead over Hong Kong in all five areas of competitiveness used to assess the financial centers: business environment, human capital, infrastructure, financial sector development, and reputation.”

Singapore has increasingly performed well in key metrics, now second in three of the five—business environment,  infrastructure and financial sector development. “Only London’s good showing in human capital and reputation put the city in second overall, ahead of Singapore,” Lim says. “This is therefore a testament to Singapore improving its attractiveness to financial institutions.”

With doubts growing about the independence of Hong Kong institutions, Singapore is seen as offering a transparent and reliable common-law legal system; stable and efficient government that aims at neutrality between competing Western and Chinese business interests; and a low-tax environment that has encouraged a raft of companies to set up regional bases, including BlackRock, Sony Music, Dyson, Tencent, and TikTok.

In the process, Singapore has enjoyed an influx of expatriates, along with newcomers to the Chinese diaspora. Lianhe Zaobao, the Singapore Chinese daily, reported in April that up to 3,500 high-net-worth individuals are set to become Singapore citizens this year, most from China. A report published the same month by New World Health and Henley & Partners named Singapore the world’s fifth wealthiest city, with some 2,800 plus resident millionaires more than last year. Singapore also leads Hong Kong in the hi-tech stakes as the latter’s aspirations are hindered by China’s “great firewall,” which monitors online content and has blacklisted websites such as Wikipedia, Facebook, and X (formerly Twitter).

Singapore’s wealth management industry is booming, led by single family offices—more than 700 have set up shop there over the past few years. One attraction is the city-state’s offering of a tax-advantaged variable capital company structure. Meanwhile, a rush of capital into Singapore’s private banks has enabled them to offer sophisticated, artificial intelligence-aligned client services and high bank-parent credit ratings. In the wake of the US mini bank crisis earlier this year, demand for Singapore bank services from US customers has been notably strong.

Unintended consequences of Singapore’s rise include higher domestic inflation in the real estate sector—residential rents have soared as much as 100% over the past two years—and the certificate of entitlement required to own a no-frills car and which costs a mid-boggling S$105,000 (some $77,000 US dollars).

Neither is Singapore immune to the risks that tend to crop up in any fast-growing finance sector. “The unfolding money laundering scandal is the latest to have utilized Singapore’s position as an international financial center for illegal activities,” says Lim, “while Singapore has been named as a key location in ongoing cross-border litigation over tax evasion in the US and UK.” An investigation is underway in Singapore involving Chinese nationals accused of laundering S$2.8 billion, which second minister for home affairs Josephine Teo described as “one of the largest anti-money laundering operations not just in Singapore, but likely in the world.” Singapore has set up an inter-ministerial committee to review safeguards. Such responses show its commitment to earning the trust necessary to be a world financial center.

More than 50 years after its founding, is the Association of Southeast Asian Nations—better known as ASEAN—set to emerge as the new EU?

The grouping of 10 Asia-Pacific states excluding China and Japan is on course to become the world’s fourth largest economic bloc by 2030, according to forecasts by a range of institutions, including the Asian Development Bank, the World Economic Forum, and ASEAN itself.

In an economic integration brief published a month prior to the Jakarta summit, ASEAN forecast that by 2030 its GDP would sit just behind those of the US, China, and India. The brief attributed this growth to the region’s youth: of a population of 670 million, 61% are currently under age 35 of whom half are expected to join the middle class by 2030.

Other factors informing such predictions include ASEAN’s position at the intersection of major trade routes—$3.4 trillion of global trade passes through the region annually—heavy inflows of foreign direct investment, both global and intra-regional; the rapid adoption of digital technologies, ensconced in the Consolidated Strategy on the Fourth Industrial Revolution for ASEAN, the blueprint the bloc adopted in 2021; and economic alignment of members with the goals of the Paris Climate Agreement and Sustainable Development Goals and the public-private partnerships that will flow from it. Add to this the increasing importance of Southeast Asia to international supply chains as de-globalization gathers momentum, and it’s not difficult to see how ASEAN could be propelled to the number-four spot.

One key tool may be the Regional Comprehensive Economic Policy (RCEP), whcih is spearheaded by ASEAN, and is now the world’s biggest regional free trade agreement, covering more than 30% of both global GDP and the world’s population, and is expected to liberalize trade, investment, and services among its members, as well as regional supply and value chains. Significantly, China is a member of RCEP, and Chinese investment is expected to be a significant driver of growth in ASEAN. Beijing invests in the mining of minerals required for clean batteries, including bauxite, copper, and nickel. These could help it build regional supply chains in its bid to dominate the global electric vehicle market and as its companies shift production to ASEAN to address production capacity caps and emissions regulations at home.

Chinese companies are mining rare earth minerals in Myanmar, processing battery materials in Indonesia, building EV autos in Thailand and producing solar panels in Malaysia. Hence, ASEAN is actually helping China to dominate in these markets, opening a path for the people’s republic to control almost all of the world’s solar module supply by 2030 and 90% of its batteries, according to a report published this year by S&P Global. 

“ASEAN will become a popular destination for foreign direct investment as multinationals rebalance supply chains to diversify geopolitical risk,” says Robert Ojeda-Sierra, director, Economics-Sovereigns at Fitch Ratings in London. “For instance, Indonesia, as well as Thailand and Vietnam, aims to become a key player in the electric vehicle supply chain by leveraging its large nickel reserves to attract investment.”

Challenges facing ASEAN, according to Ojeda-Sierra, include “the development gaps between and within members in terms of income, human capital, institutions, and infrastructure as well as disparities in good governance and the rule of law.”

ASEAN must do better at attracting capital as a bloc, says Eugene Wong, founder and CEO of the Sustainable Finance Institute Asia (SFIA) in Kuala Lumpur. “At the one end you have Singapore, a triple-A sovereign, and you have Laos and Indonesia at the other, and these exemplify the diverse credit propositions ensconced in the region.” Together, the member countries need to lower their cost of capital, he adds: “This will involve de-risking and the involvement of concessionary capital in public-private financing.”

Hitting the Paris agreement targets will also require a unified effort, says Wong. This means outlining collective aims across four environmental objectives and how ASEAN proposes to attract the capital needed to fund new, sustainable infrastructure. Key sectors include renewable energy, green buildings, sustainable transport, and water, waste and land management.

Several countries—Indonesia, the Philippines, Singapore, Thailand and Vietnam—have already developed or are developing their own taxonomies addressing these questions, to be aligned with ASEAN’s joint taxonomy. Version 2 published in March, categorizes economic activities as either “Green,” which contribute to or enable climate change mitigation, “Amber,” which contribute to decarbonization and “Red” which do not contribute to or enable climate change mitigation. Facilitating a gradual transition to a fully green, “Tier 1” regional economy is the Taxonomy’s aim and it has no explicit short to medium-term timeline—achieving net zero carbon emissions in ASEAN by 2050 is the ultimate long-term goal.

Sustainable Finance 2 aims to provide an “inclusive, overarching guide for the region” rooted in an orderly and just transition, says Noorrafidah Sulaiman, chair of the 40-member ASEAN Taxonomy Board (ATB), which is made up of the region’s central bank governors, capital markets and insurance regulators,and finance ministers and is tasked with hammering out a regional plan along the lines of the EU’s 2020 Green Taxonomy with which it is designed to be interoperable. Subsequent iterations of the ASEAN Taxonomy for Sustainable Finance will be produced as a result of the ATB’s ongoing dialogue.

In a region that relies heavily on fossil fuels and carbon-intensive activities that include green-tech mineral mining, agreeing on a single, similarly ambitious development plan will be a challenge. “The multi-level development banks are aiming at de-risking, to provide credit facilities with guarantees,” Wong points out, “and there is talk of providing downside currency risk mitigation, one of the core risks faced by overseas capital when investing in infrastructure projects in the region.”

“Many trillion dollars of savings are still not well matched with many trillion dollars of need,” says Jang Ping Thia, lead economist and manager of the Asian Infrastructure Investment Bank’s economics department in Beijing that focuses on sustainable project lending. “The gap needs to be closed from all sides of the equation.” The AIIB has approved around $45 billion of projects, and all AIIB projects since the middle of this year have been Paris-aligned, but it remains “to assist members and clients shift up another gear on climate financing and avoid slipping on net zero targets,” Thia notes.

To establish itself as the world’s fourth largest economic bloc, ASEAN will need GDP gains in all its member countries, but the odds are on Vietnam—­which booked the region’s strongest GDP growth last year, 8.02%­—to deliver the most powerful, transformative contribution.

Brunei Darussalam is another ASEAN outlier in the decarbonization story. Second only to Singapore in per capita GDP within the bloc, the International Monetary Fund has estimated that 70% of the sultanate’s national income derives from hydrocarbon exports. That sits uneasily with the aim of excluding fossil fuels from the final, enforceable ASEAN taxonomy, wherein Brunei’s “amber” activities must “sunset” to render its economy “fully green.” And Brunei is not alone; many countries bound by the Paris Agreement face the same challenges.