Repost: Asia and its effects on European Banks
---------------------
FOCUS-European banks feel heat of Asian exposure
Reuters Story - January 16, 1998 15:22
PARIS, Jan 16 (Reuters) - European banks are putting on a
brave face as rating agencies and investors calculate how much
Asia's economic crisis could cost bankers this side of the
world.
U.S. ratings agency Moody's swooped on its first victim in
France mid-week, warning that it could downgrade state bank
Credit Lyonnais because of its "very large" credit ties in Asia
and adding that other banks could get the same treatment.
By Friday, Moody's had issued similar downgrade warnings on
four German banks, Commerzbank, the third-biggest
private sector bank in Germany, as well as three publicly owned
banks, Westdeutsche Landesbank, Norddeutsche Landesbank and
Bayerische Landesbank.
For the banks, and especially for Credit Lyonnais as it
strives to shrug off a financial debacle of the late 1980s and
early 1990s on the road to possible privatisation, the
announcements risk exacerbating a situation developing day by
day as Asia's financial troubles unfold.
French bank executives have gone on a public offensive to
defend their investments in the region.
"On the six countries which have so far been hit by the
crisis, that is to say Korea, Indonesia, Vietnam, Thailand,
Malaysia and the Philippines, the Credit Lyonnais has about
eight billion dollars worth of exposure and for the moment we
have no problems in the area," Credit Lyonnais executive Pascal
Lamy said on Thursday.
Commerzbank on Friday said it had sent a written complaint
to Moody's, saying that the ratings agency's reasoning for
>>We have been talking about this recently. T.<<
launching the review into a possible downgrading of the bank was
based on false premises.
European banks are collectively the biggest lenders to Asia,
ahead of Japanese and U.S. banks, with 43 percent of lending
business in the region at the time of the latest update by the
Bank for International Settlements in mid-1997.
German and French banks are in the front line and British
banks are not far behind, especially if one counts in Hong Kong
exposure for the two banks with a huge local presence in the
former British colony, HSBC and Standard Chartered
.
Romain Burnand, a London-based bank analyst at Paribas who
wrote a report in November which was one of the first
comprehensive overviews of European bank involvement in Asia,
said on Friday he believed that things had got worse since then,
if anything.
"What is very difficult, impossible at this stage, is to
assess the cost for European banks," he told Reuters Financial
Television. "We are of course a bit more concerned than in
November," he said.
He says European banks are far more heavily involved in Asia
than they were in Mexico when the peso and Mexico's economy took
a nose-dive in late 1994 and in 1995.
His report, based on a sample of 1,000 syndicated loans,
estimates German bank exposure at $24.4 billion for the three
economies relying on IMF rescue -- Thailand, Indonesia and South
Korea -- and Malaysia and the Philippines.
French bank exposure for the same five-country zone totals
$17.9 billion, with Credit Lyonnais marginally ahead of Societe
Generale , each with more than $6.0 billion each tied
up, followed by BNP with exposure of more than $4.0
billion.
On the official level, the French banks are trying to be
reassuring. Credit Lyonnais has rolled out executives to tell
the press that it may be the most exposed French bank in South
Korea, but that its clients are the top six industrial groups
there and that this is about as safe as you can get for debt in
the country.
Credit Lyonnais's top Asia executive, Jacques Kosciusko,
said he expected "zero provisions" in South Korea for 1997 and a
generally positive result for the region as a whole.
And BNP executive George Chodron de Courcel told Reuters
that the group was still able to stick by a forecast of a marked
1997 profit rise which it made as far back as September -- and
that he was "calm" about 1998.
Paris bank sources also say privately they are sceptical
about some of the estimates being made on the Asia risks and
turn enquiring journalists elsewhere.
"You see more about French banks than any others...What
about the Americans?" one banking source here said recently.
The same source said exposure figures were particularly
delicate for banks at the moment, notably when foreign banks are
trying to hold together the solidarity that was required for a
general rollover of South Korea's short-term debts.
Following is a table with estimates from the report by Paribas.
the
report says it used as sources data from central banks as well
as the Bank
for International Settlements.
Estimates were also based on analysis of 1,000 syndicated loans
and
information and data from the individual banks themselves in
some cases.
The figures have been questioned by some French
bankexecutives, who say
they are based on extrapolations more than on "hard" data.
(figures in $ million)
FRENCH SocGen CL BNP Indo. CIC CCF Total
-------------------------------------------------------
Thai. 1,613 720 1,226 152 243 0 3,953
Indo. 936 1,520 1,219 303 429 18 4,425
Kor. 3,185 3,780 800 574 0 0 8,340
Malay. 325 330 619 37 204 0 1,515
Phil. 304 280 230 551 144 0 1,508
Total 6,363 6,630 4,094 1,617 1,019 18 19,741
-------------------------------------------------------
HK 5,710 1,020 5,171 2,059 158 216 14,334
Sing. 3,800 1,600 3,900 1,720 980 0 12,000
Taiw. 1,316 1,450 1,771 576 18 0 5,132
Total 10,826 4,070 10,842 4,355 1,156 216 31,465
-------------------------------------------------------
Total 17,189 10,700 14,936 5,972 2,176 234 51,207
UK RBS NatWest Barclays Schroders Total
-------------------------------------------------------
Thai 500 459 204 331 3,112
Indo. 969 709 360 131 3,675
Kor. 325 114 190 0 4,411
Malay. 60 65 140 37 1,702
Phil. 239 192 0 0 1,190
Total 5 2,094 1,538 894 499 14,090
-------------------------------------------------------
HK 305 1,973 1,071 499 23,606
Sing. 208 2,039 1,271 2,039 16,550
Taiw. 55 49 340 0 1,504
Total 3 568 4,061 2,682 2,539 41,660
-------------------------------------------------------
Total 2,662 5,599 3,576 3,038 55,750
GERMAN Dres- Bay Comm West Deut- Bay Nord Bank BHF
Total
dner LB Bank LB sche Ver. LB Gesell
----------------------------------------------------------------
Thai 872 2,045 616 735 641 542 527 0 23
6,002
Indo. 980 204 1,351 708 1,192 560 194 0 0
5,189
Kor. 1,993 1,755 1,689 2,185 731 541 622 61 0
9,576
Malay. 276 805 549 114 295 54 104 0 0
2,197
Phil. 618 72 62 199 359 77 24 0 0
1,410
Tot.5 4,738 4,881 4,267 3,942 3,218 1,774 1,471 61 23
24,374
----------------------------------------------------------------
HK 2,706 2,519 2,336 6,062 4,830 995 133 0 550
20,131
Sing. 3,072 6,039 3,231 2,145 6,781 1,934 1,112 0 238
24,553
Taiw. 247 189 233 932 1,160 0 0 0 0
2,761
Tot.3 6,026 8,747 5,800 9,139 12,770 2,929 1,245 0 788
47,445
----------------------------------------------------------------
Tot.10,764 13,628 10,067 13,081 15,988 4,703 2,717 61 811
71,819
SWISS UBS CSG SBC Total
-------------------------------------------------------
Thai 109 371 203 684
Indo. 590 936 159 1,686
Kor. 1,421 838 933 3,192
Malay. 124 206 0 331
Phil. 139 0 101 239
Total 5 2,383 2,352 1,396 6,131
-------------------------------------------------------
HK 2,571 3,113 1,525 7,209
Sing. 2,844 2,225 1,874 6,943
Taiw. 1,277 0 0 1,277
Total 3 6,692 5,338 3,399 15,429
-------------------------------------------------------
Total 9,075 7,690 4,796 21,560
ITALIAN BCI C. Italiano Total
--------------------------------------------------------
Thai 194 0 194
Indo. 104 7 111
Kor. 228 0 228
Malay. 115 0 115
Phil. 0 0 0
Total 5 641 7 648
--------------------------------------------------------
HK 1,639 287 1,926
Sing. 0 0 0
Taiw. 0 24 24
Total 3 1,639 312 1,951
--------------------------------------------------------
Total 2,279 318 2,597
NETHERLANDS ING ABN-Amro Rabobank Total
--------------------------------------------------------
Thai 671 701 159 1,531
Indo. 907 524 532 1,963
Kor. 748 1,189 0 1,937
Malay. 109 241 351 701
Phil. 671 339 29 1,038
Total 5 3,106 2,994 1,071 7,171
--------------------------------------------------------
HK 812 3,109 775 4,695
Sing. 1,859 5,006 143 7,008
Taiw. 217 1,085 78 1,379
Total 3 2,888 9,200 996 13,084
--------------------------------------------------------
Total 5,995 12,194 2,067 20,255
NOTE: Figures for HSBC and Standard Chartered are included in
the totals above for the UK banking sector but not detailed
individually
since the banks' cross-border exposure is just a small part of
their overall
exposure, the Paribas report says.
It also noted that figures are not given for Paribas itself for
compliance reasons.
((Brian Love, Paris newsroom, +33 1 4221 5452, fax +33 1 4236
1072,
paris.newsroomreuters.com)) |
