Asian banks prepare for European banks withdrawal
(27 January 2012 – Asia) The new capital raising requirements being enforced in Europe could lead to a withdrawal of funds lent to Asian firms.
In an almost desperate need to bolster balance sheets, European banks will continue to lose leverage in Hong Kong and the rest of Asia.
The banks are coming under pressure and the first to go will be offshore loan books.
It is expected domestic banks would be able to take up the slack as European banks exit, in effect Asian banks could have more on the books within six months.
Under the Basel III regulation passed by global regulators, European banks must raise the amount of capital they hold to 9 percent of risk-weighted assets.
The European Banking Authority last year said it would take steps to ensure that banks did not de-lever too quickly and destabilise the wider financial system.
The banks are coming under pressure and the first to go will be offshore loan books.
It is expected domestic banks would be able to take up the slack as European banks exit, in effect Asian banks could have more on the books within six months.
Under the Basel III regulation passed by global regulators, European banks must raise the amount of capital they hold to 9 percent of risk-weighted assets.
The European Banking Authority last year said it would take steps to ensure that banks did not de-lever too quickly and destabilise the wider financial system.
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