Goldman Sachs has received licenses to provide fund management and corporate finance advisory services in Malaysia, making the investment bank the latest foreign institution to benefit from the continuing liberalisation of Malaysia's financial sector.
The approvals from Malaysia's Securities Commission (SC) allow the bank to officially open an office in the country and to offer onshore fund management services for the first time. Previously, Goldman was only able to manage Malaysian institutional funds invested outside the country.
A representative of the bank said it could potentially launch funds in Malaysia.
Goldman already offers investment banking services, including capital markets and mergers and acquisition advisory, to companies in Malaysia from its Hong Kong and Singapore offices. This year it has advised on deals such as Maxis' $3.3 billion initial public offering last month and Maybank's $1.6 billion rights issue in April. Goldman intends to increase these activities.
Goldman said in a statement that it plans to open an office in Kuala Lumpur during the first half of 2010.
"The future outlook for Malaysia's capital markets and its asset management industry is very positive and through our local presence we look forward to playing a larger role in their development," said Tim Leissner, co-president of Southeast Asia at Goldman Sachs.
Leissner is currently responsible for investment banking in Malaysia together with Roger Ng, an executive director in the bank's investment banking division. Goldman Sachs would not comment on whether these two will retain this responsibility or who will become head of the new domestic operation.
Currently, no one person at the institution is responsible for offshore asset management businesses coming from Malaysia.
Goldman's license approvals are part of Malaysian prime minister Najib Tun Razak's goal to further liberalise the financial services sector. In June, he announced a series of liberalisations in the fund management industry, including allowing 100% foreign ownership of asset management firms and raising the foreign ownership cap in unit trust management companies and brokerages to 70%.
"Internationalisation of the financial services sector and the capital markets will serve to expand the scope of opportunities for our country," said Razak in a June speech. Earlier in the year, he had announced the addition of five new commercial banking licenses and two Islamic mega-banking licenses as part of a broader foreign investment liberalisation programme.
Malaysia granted Industrial and Commercial Bank of China a banking license last month.
Islamic finance is one sector Goldman is currently not active in, but could be in the future. "Malaysia is an Islamic financial centre and it's certainly an area we will be looking at closely," said the bank. "It is not the driver [of our Malaysia strategy] but an area we will be looking at in terms of capital markets and Islamic funds management."
The net asset value of Malaysia's conventional wholesale funds industry is M$7.9 billion ($2.3 billion) and of its Islamic wholesale funds industry M$3.2 billion, according to the SC.
Goldman's Asia-Pacific third quarter net revenue amounted to $2.25 billion, up dramatically from last year which was negatively impacted by the financial crisis, but down nearly 28% from the previous high of $3.13 billion in 2007.