StanChart chairman sees Belt and Road as 'strategic priority'

Standard Chartered chairman Jose Vinals says that China's Belt and Road Initiative can be a "formidable force" to strengthen globalisation and make it more inclusive.
Standard Chartered chairman Jose Vinals says that China's Belt and Road Initiative can be a "formidable force" to strengthen globalisation and make it more inclusive.ST PHOTO: ARIFFIN JAMAR

Bank has presence in 45 of 60-plus countries linked to Chinese trade-route initiative

Involvement in China's Belt and Road Initiative (BRI) - which calls for massive development of infrastructure along key trade routes - is a "strategic priority" for Standard Chartered, its chairman Jose Vinals said.

He told The Straits Times in an interview that the initiative, if executed well, can be a "formidable force" to strengthen globalisation and make it more inclusive - especially in the face of protectionist winds blowing in from developed Western economies.

Mr Vinals, who visited Singapore last week for meetings, was appointed chairman of StanChart in December last year.

He joined the bank from the International Monetary Fund, where he was the financial counsellor and director of the monetary and capital markets department.

Mr Vinals began his career as an economist before spending 25 years at the Central Bank of Spain, where he rose to be the deputy governor.

StanChart is likely the international bank with the broadest footprint across the Belt and Road, he said, noting that the bank has a presence in 45 of the 60-plus BRI countries across Asia, the Middle East, Europe and Africa.

"This is for us a strategic priority. We are already involved in a number of projects and intend to continue playing a significant role."

BULLISH ON CHINA

I am very positive about the medium-term outlook for China and policymakers have room to manoeuvre if shocks occur.

MR JOSE VINALS, chairman of Standard Chartered Bank.

Mr Vinals also outlined the key challenges facing the global economy and banking industry.

The world economy is finally showing signs of recovering from the global financial crisis, helped in part by ultra-low interest rates, but these low rates have also compressed profit margins for banks, he noted.

This comes on top of stricter banking regulations, as well as increased competition from non-bank entities, including technology companies.

While there have been concerns that ultra-low interest rates might cause the next global recession by encouraging overly risky investment behaviour, Mr Vinals said he does not see a crisis coming.

Government policies - for instance, property-market cooling measures in Singapore - can help curb the formation of asset price bubbles, he noted.

"While low interest rates might have adverse side effects, like higher leverage and asset bubbles, other policy instruments like macroprudential policies can be directed at addressing financial stability risks."

Mr Vinals is also optimistic about prospects for Asia - especially as China continues to grow in importance in the region and transitions towards a more sustainable growth model.

There are some concerns about rising corporate credit and the size of the country's shadow banking sector, he noted, but the Chinese authorities "have been stepping up their game to safeguard financial stability".

"There will be bumps and shocks in the process of China opening up and integrating financially with the rest of the world," he said.

"(But) I am very positive about the medium-term outlook for China and policymakers have room to manoeuvre if shocks occur."

Mr Vinals also reiterated the bank's commitment to Singapore, noting that it is Standard Chartered's second-most important market after London in its footprint of 69 countries.

"We are super committed to this country... We have many global functions located here.

"We have an excellent franchise here which we are working very hard to develop further."

A version of this article appeared in the print edition of The Straits Times on October 02, 2017, with the headline 'StanChart chairman sees Belt and Road as 'strategic priority''. Print Edition | Subscribe