|
ASIAN
policymakers see little risk their countries will be hit
by a crisis similar to the economic meltdown of 1997,
downplaying concern the US turmoil will infect the
region’s financial system.
“This is
nothing” compared with 1997, Bank of Thailand Governor
Tarisa Watanagase said on Bloomberg Television in
Bangkok on Thursday. “The direct impact is very limited,
although we may see some slowdown through the trade
channel later on.”
Central
banks continued to pump money into their financial
systems to ensure liquidity as investors sold shares of
Australia’s Macquarie Group Ltd. and Kookmin Bank, South
Korea’s biggest lender. Asian banks have limited
exposure to Lehman Brothers Holdings Inc., which filed
for bankruptcy earlier this week, officials say.
“The
risk to Asian banks is more from the impending economic
slowdown and market turmoil than from direct exposure to
the distressed US financial institutions,’” said Ritesh
Maheshwari, a Standard & Poor’s analyst in Singapore.
Their “strengthened balance sheets as a result of
healthy profits can withstand the impact of likely
losses from direct exposure.”
The
Asian financial crisis, set off by plunging currencies,
led to the collapse of companies as they buckled under
billions of dollars of debt, forcing Indonesia, Thailand
and South Korea to turn to the International Monetary
Fund for bailouts. The region has since accumulated more
than $3.3 trillion of reserves, about half of the global
total.
BOJ’s
Shirakawa
“I don’t
think a financial crisis will take place in Asia,” Bank
of Japan Governor Masaaki Shirakawa said on Wednesday.
“The
situation of Asian economies is different from the time
of the 1997-1998 crisis. They have plenty of foreign
reserves.’”
The
Japanese central bank on Thursday added 2.5 trillion yen
($23.9 billion) to its financial system in its third day
of fund injections, while Reserve Bank of Australia
pumped in A$3.015 billion ($2.4 billion).
“There
is a credit crunch everywhere, even in Japan, but it’s
relatively better here as Japanese banks are still
okay,” said Susumu Kato, chief economist in Tokyo at
Calyon Securities, a primary dealer required to bid at
government debt sales. “Domestic institutions don’t want
to give money to foreign institutions, so the BOJ
stepped in to stabilize the market.”
Lehman’s
bankruptcy, the sale of Merrill Lynch & Co. to Bank of
America Corp. and the US government bailout of American
International Group Inc. this week has sparked concern
of more financial failures, sending the cost of
short-term credit higher in the US and Europe. In Asia,
money market rates have remained relatively low.
Asia Vs
US
The
difference between what the Japanese government and
banks pay to borrow yen for three months reached its
lowest in six months. By contrast, the so-called US TED
spread expanded to the widest since Bloomberg began
compiling the data in 1984.
The
London interbank offered rate, or Libor, rose 19 basis
points to 3.06 percent, the British Bankers’ Association
said Thursday. The increase was the biggest since
September 29, 1999.
Japan’s
banks and insurers, including Mitsubishi UFJ Financial
Group Inc., have announced a combined 245 billion yen of
potential losses tied to the collapse of Lehman, while
lenders in China said they have about $384 million of
exposure to the US securities firm.
Potential losses of Japanese banks “seem to be within
the levels that can be covered by their profits,” Bank
of Japan’s Shirakawa said. “There’s no concern that the
latest events will threaten the stability of Japan’s
financial system.”
Thailand, which triggered the Asian financial crisis
with the devaluation of its baht in July 1997, has no
shortage of capital and the nation’s lenders are “strong
and resilient,” Tarisa said today.
The
banking industry is “a lot more cautious and risk
adverse ever since the 1997 crisis,’’ she said. “We had
learnt from the crisis. I don’t think there is any
chance at all that one of our banks will come into
problems.”
The
exposure of local banks in the Philippines to Lehman is
between 0.3 percent and 0.4 percent of their total
assets, central bank Governor Amando Tetangco said in a
Bloomberg Television interview today. Losses stemming
from the holdings may hurt bank earnings though won’t
damage their capital, he said.
Australia’s bank regulatory system is strong enough to
give customers “certainty” about the state of their
lenders, Prime Minister Kevin Rudd said even as he
warned that it was a serious time for the nation’s
financial institutions.
During
Asia’s 1997 financial crisis, Indonesia, Thailand and
South Korea spent most of their currency reserves
attempting to prop up their exchange rates after
investors abandoned them. The IMF arranged more than
$100 billion of loans to the three countries after their
currencies collapsed.
“Emerging Asia should be relieved that, unlike the 2001
tech bubble burst and the 1997-98 financial crisis, the
‘action’ has started elsewhere for a change,” said Paul
Gruenwald, an economist at Australia & New Zealand
Banking Group Ltd. In Singapore. “As a result, the
region seems likely to pass through the current credit
crisis relatively well.” (Bloomberg) |
