Asian banks show warning signs, remain healthy for now
(28 June 2012 – China) According to Fitch Ratings, early warning signs about Asia’s banks generally are apparent.
While not downgraded by credit ratings agencies, China’s huge state-owned banks are cause for serious concern in the weakening economy.
Fitch Ratings financial institutions group managing director, Mark Young said although most banks in Asia are health for now, there are warning signs.
His biggest concern is China's state banks that cornered much of the government's massive stimulus package in 2008.
'They have got a lot of money, our concern is that it is being lent to projects, developments that are not going to necessarily generate a return and these loans will ultimately go bad,' he noted.
Young has also been trying to assess the level of bad or non-performing loans these banks are carrying. He believes a lack of transparency and risk management means these loans are actually understated and are growing.
'The issue is that it is unregulated, the risks are unknown in terms of the other side of the balance sheet."
Fitch Ratings financial institutions group managing director, Mark Young said although most banks in Asia are health for now, there are warning signs.
His biggest concern is China's state banks that cornered much of the government's massive stimulus package in 2008.
'They have got a lot of money, our concern is that it is being lent to projects, developments that are not going to necessarily generate a return and these loans will ultimately go bad,' he noted.
Young has also been trying to assess the level of bad or non-performing loans these banks are carrying. He believes a lack of transparency and risk management means these loans are actually understated and are growing.
'The issue is that it is unregulated, the risks are unknown in terms of the other side of the balance sheet."
Subscribe