Asian banks hit with eurozone investment withdrawals
(6 June 2012 – Asia) European banks are being forced to withdraw massive investments from Asia as the eurozone crisis continues.
Singapore’s DBS Bank Ltd, Southeast Asia’s largest bank by assets, said an amount more than the entire GDP of Vietnam fled Asia in the second half of 2011 and the retreat is continuing.
The European Commission said recently that cross-border steps are now necessary to prevent the eurozone crisis from worsening. Many experts said a Lehman-styled credit crunch in Asia similar in extent to the 2008 global financial crisis is unlikely, however.
The European Union has called bank deposit guarantees to calm investor fears that Spain will be unable to pay for the escalating cost of its US$800 billion (A$819 billion) public debt.
The concern among Asian banks is that European banks will run into a tightening liquidity and be forced to pull out of Asia as a whole.
European banks, many of which are global banks, provide funding to emerging markets, including Asia. Emerging markets, therefore, cannot be completely immune to what is an inevitable deleveraging of the European banking system.
The European Commission said recently that cross-border steps are now necessary to prevent the eurozone crisis from worsening. Many experts said a Lehman-styled credit crunch in Asia similar in extent to the 2008 global financial crisis is unlikely, however.
The European Union has called bank deposit guarantees to calm investor fears that Spain will be unable to pay for the escalating cost of its US$800 billion (A$819 billion) public debt.
The concern among Asian banks is that European banks will run into a tightening liquidity and be forced to pull out of Asia as a whole.
European banks, many of which are global banks, provide funding to emerging markets, including Asia. Emerging markets, therefore, cannot be completely immune to what is an inevitable deleveraging of the European banking system.
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