3 / 7 bis central bankers'speeches risks. third, attract green funds and asset managers with a sustainability focus. i am pleased to announce that mas will soon be placing us $ 2 billion of our funds with asset managers that are committed to deepen green finance activities out of singapore. mas announced the programme just over a year ago. through a highly competitive process, we have now identified a select group of asset managers with a strong green focus. they have a good track record of sustainability investing, robust stewardship policies, and a strong understanding of how to deliver a portfolio that has a deep environmental footprint while still delivering good returns. the selected asset managers will designate singapore as their sustainability hub in the asia pacific. their singapore offices will lead asia - focused sustainability research and spearhead esg engagements in the region. many also have plans for designing training curriculum in sustainable finance to help build relevant skills among the broader investor community. these asset managers will be valuable partners to mas and the investor community in the sustainability journey. improve consistency and transparency of esg reporting and disclosures our second area of focus is to improve the consistency and transparency of esg reporting and disclosures. the biggest challenge to sustainability investing is a lack of clear, agreed definitions of what is green and what is sustainable. despite good improvements in esg disclosures, there are varying standards and inconsistent definitions. esg scores of companies vary due to differences in methodologies used by rating agencies, and these methodologies are often opaque to the investor. the lack of consistency and transparency affects investors ’ ability to monitor progress in emissions reduction or measure outcomes in sustainability. we are tackling this issue through four strategies. first, provide guidance for asset managers to assess, monitor, mitigate and disclose environmental risks. mas recently issued to all financial institutions guidelines on environmental risk management incorporating best practices drawn from around the world. in fact, mas co - created these guidelines with imas, actively engaging asset managers to better understand industry practices. i am pleased that imas will be conducting workshops to strengthen capabilities in this area. 4 / 7 bis central bankers'speeches second, develop taxonomy to identify and classify activities that can be considered green or in transition towards green. an industry - led green finance task force has issued a consultation paper setting out a green taxonomy for singapore - based financial institutions. the taxonomy references international best practices and adapts them to the asian context where relevant. a unique feature of the proposed taxonomy is that it covers transition activities that allow for a

have retreated. first, they have increased their lending to the region significantly. in 2007, asian banks accounted for just a third of all international claims 1 to the region. today, they account for more than 60 % of non - local lending to the region2. this increase comes on the back of a decline in lending by euro - area banks – over the same period, their share decreased from around a third to less than 15 % as they pulled back from the region. second, asian banks have been acquiring the asian business lines from global banks, especially in wealth management. in 2013, sumitomo mitsui banking corporation bought over socgen ’ s japanese private banking arm. and just late last year, ocbc bank acquired barclays ’ wealth and investment management business in singapore and hong kong. even as asian banks push for growth, they continue to maintain high prudential standards. the average tier 1 capital ratio of asian banks was 13. 4 % as of last year, up from 10. 6 % in 2008 and comfortably above the basel minimum requirement of 6 %. key asian jurisdictions who are members of the financial stability board – including china, japan, indonesia, korea, hong kong and singapore – have been assessed to be compliant or largely compliant with the basel committee ’ s capital and liquidity standards. several other asian countries – malaysia, philippines and thailand – have also implemented the basel iii rules. asian banks are dealing with cyclical headwinds the major asian banks ’ sound prudential standards position them well to face the challenges in the current environment – ranging from geopolitical risks to heightened policy uncertainty in the advanced economies. the post - crisis operating environment has been difficult for banks around the world. european bank profitability remains depressed seven years after the global financial crisis, with return on equity or roe averaging below 3 %. asian banks have also not been spared, though they have done better. the roe of asian banks has been declining in recent years, and is currently hovering around 8 %. a recent study3 by mas found that three cyclical factors have driven the decline in asian bank profitability. first, weaker global economic growth has affected credit demand in the region, leading to slower loan growth. second, prolonged accommodative monetary policy in the advanced economies has compressed domestic interest rate spreads in asia. this has reduced banks ’ interest income. third, asset quality has declined, as non - performing loans ( npls ) have risen in many regional economies