HONG KONG, Jan 12 (Reuters) - Some global banks pulled backfrom Asia's local currency bond markets in 2014, hit byincreasingly stringent capital requirements and decliningrevenues, researcher Greenwich Associates said on Monday,creating new opportunities for local operators.
"From the dealers' perspective, maintaining a franchise indomestic currency Asian bonds is a very expensive and verycapital-intensive proposition," said Abhi Shroff, a GreenwichAssociates consultant in Singapore.
The pull-back by global institutions has createdopportunities for domestic banks such as KDB Daewoo Securitiesand Woori Investment & Securities in South Korea, ICBC, Bank ofChina and CITIC Securities in China, ICICI Securities and AxisBank in India, and CIMB and Maybank in Malaysia, Greenwich said.
Large global banks have steadily pulled out of the Asianlocal currency bond markets because they could not compete withlocal players on costs, especially when revenue flow began toslow down.
"None of the large global banks are increasing headcount andthey are taking a long, hard look at their fixed-income,commodity and currency businesses," said an independentfixed-income credit strategist.
RBS's planned exit from its Asia operations is the latesthigh-profile departure. In recent years, UBS has broadlyretreated from Asian fixed-income markets while Barclays has cutback on staff numbers.
"Real money" foreign investors have also pulled back fromAsia's local currency bond markets, with foreign holdings ofdomestic bonds as a percentage of their total ownership declining in most markets. Malaysia and Philippines have seen the biggest declines, according to data compiled by BNP Paribas.
But not all global banks have left the field. Currently inAsia-ex Japan, Australia and New Zealand, HSBC is the topfixed-income operator with an 11 percent market share, followedby Citi with an 8.8 percent share and Deutsche Bank at 7.4percent.
(Reporting by Saikat Chatterjee; Additional reporting by UmeshDesai; Editing by Eric Meijer)