Asia regulatory reform may have negative effects: KPMG

The lack of a level playing field on the regulatory reform in Asia Pacific may have long-term negative effects on the economy and place a burden on the region's banks, said a KPMG report released on Wednesday.

Comparing the Asian banking regulation with Europe and the United States, there are some areas where there is a clear commonality of approach such as on capital, and others where there is more diversity, such as liquidity reforms, the report said.

"These differences make it quite difficult for banks to work out what they need to do country-by-country," said Simon Topping, head of financial services regulation, Asia Pacific, at KPMG.

"Different timescales and differences in detail are a particular concern to the global banks, as they face the prospect of their home country requirements differing substantially from the requirements they need to meet in Asia," Topping said.

The report said the three "hottest" regulatory issues in Asia are capital, liquidity and compliance with the new US tax law FATCA.

Regulators in Asia are focusing on a narrower range of issues than in Europe and the US, but this still constitutes a significant regulatory burden on the banks, Topping added.

"To many, this seems disproportionate, given that the banks in Asia have not experienced anything like the problems of the banks in Europe and the US in recent times," he said.

While banks in Asia can generally meet the new requirements at this particular point in time, the report cautioned that this might be more of a challenge in a few years' time, when bank balance sheets have grown significantly, on the back of strong economic growth.

And although the new global regulatory standards set a new recognized minimum standard, it's not necessary for some regulators to "gold-plate" the requirements by setting local requirements higher than the global standards, it added.