Unlike retail banking customers, high networth customers seek a banking service that is tailored to their needs, that offers them a high degree of confidentiality, jurisdictional stability and access to an international / global range of financial products and services.
To cater to such a discerning clientele, Malaysia created the Labuan Interna tional Business and Financial Centre (Labuan IBFC). In this post we will look at the IBFC and its working in a little more detail:
What are the range of Business and Financial Services available in the Labuan IBFC?
These are usually grouped under two categories:
▪ Labuan trading activities include banking, insurance, trading, management, licensing, shipping operations or any other activity which is not a Labuan non-trading activity. Trading companies are generally those that carry out business on a day-to-day basis.
▪ Labuan non-trading activities mean activities relating to the holding of investments in securities, stocks, shares, loans, deposits or any other properties by a Labuan entity on its own behalf. Investment companies usually only hold assets or shares in companies located in other jurisdictions.
Some of the services offered by Labuan entities include:
▪ Pre-incorporated companies – these are made available to investors who are keen to purchase a ready-made company in Labuan.
▪ Banking – Labuan banks offer the following products and services:
▫ Term/fixed deposits in major international currencies
▫ Project financing (project evaluation/feasibility studies)
▫ Capital restructuring
▫ Revolving credit
▫ Syndication/loan arrangement
▫ Trade financing (letter of credit)
▫ Islamic financing
▫ Performance and financial guarantees
▫ Private banking/portfolio fund management
▫ Investment banking / corporate advisory (initial public offerings (IPO), mergers and acquisitions)
▫ Listing of financial instruments on the Labuan International Financial Exchange (LFX)
▫ Proprietary trading and investment (bonds, equities)
▫ Foreign exchange
▫ Foreign currency term loan
▫ Derivatives (interest rate swaps, cross currency swaps)
▫ Hedging (interest rates – Chicago Board of Trade (CBOT), London Interbank-Offered Rate (LIBOR), etc)
▫ Correspondent banking (for Malaysian banks).
▪ Islamic Banking – Offering of banking services in accordance with Shariah principles.
▪ Investment Banking – It means the business of providing credit facilities and consultancy and advisory services relating to corporate and investment matters, including making investments on behalf of any person. Other activities include undertaking foreign exchange transactions, interest rate swaps, dealings in derivative instruments or derivative financial instruments or any other similar risk management activities.
▪ Trust companies and ancillary services ▪ Leasing services ▪ Mutual Funds ▪ Insurance ▪ Factoring ▪ Money Broking ▪ Commodity Trading ▪ Shipping Registry services ▪ Wealth Management services
How is the Labuan IBFC managed?
The Labuan IBFC is managed by the Labuan Financial Services Authority (Labuan FSA) which was established on the 15th of February 1996 under the Labuan Financial Services Authority Act, 1996.
Labuan FSA’s key role is to license and regulate licensed entities operating within Labuan IBFC and to ensure all such entities remain in compliance with the internal and international best standards adopted by the jurisdiction. Labuan FSA also develops policies for the orderly conduct of business and financial services in Labuan IBFC.
* Data source: Labuan IBFC website – http://www.labuanibfc.com
Examples of global / international bank accounts in Malaysia
Citibank’s Global Banking, Standard Chartered Bank’s Priority Banking and HSBC Premier are some examples of global banking services available in Malaysia.