The idea that Sydney could be a physical bricks-and-mortar hub for Asian financial services was 'misconceived', an International Monetary Fund seminar has been told.
A member of the Federal Government task force on 'Australia in the Asian Century' John WH Denton told the forum that the idea of Sydney as a hub for Asia was "not the most helpful".
The concept of "bricks-and-mortar is misconceived," said Denton, who is also Corrs Chambers Westgarth partner and chief executive.
"It's a trust and relationship play," he said.
The financial services' providers who were doing well in Asia were not from the US nor the UK, but from Australia "because they are happy with Australians because they are not a threat".
Infrastructure was a key area, but the UK model had been rejected in preference for the Australian model of public-private partnerships (PPP).
Denton said the secret to the success of the Asia-Pacific Economic Cooperation (APEC) group was that it was voluntary, in contrast to the European Union's compulsory methods.
Macquarie Securities Group global head of research John O'Connell said financial services' providers had to give up on the idea of owning large financial institutions in Asia, especially since the global financial crisis.
Every country wanted to control its own banks, he said. For example, ING had five subsidiaries in Asia: in China, Vietnam, Thailand, Malaysia and India - but had a controlling interest in the Thai bank only.
"This is one of the big issues, so you have to find niches," he said.
He said there were opportunities in trade finance, which had once been owned by French banks which dealt in derivatives.
"But, because of the problems in France, they've retreated ... creating a niche opening," he said.
Denton said Australians needed discussions on hope, not only on financial services. The country had been through a transformation of the economy "and people are trying to work out where they are ... they thought they could monetise (their houses) and they can't".
Denton said Australia was one of the two economies that were most integrated with Asia - the other being Indonesia.
