Asian Banks In Serious Trouble
Banks in Asia are still in serious trouble and could spark further financial turmoil in the region, according to an international banking authority. John Howard reports.
The president of Thomson Bank Watch Asia, Mr Philippe Delhaise, said in Adelaide last night that Asian Banks had failed to address their previous mistakes and would continue "under intensive care" for at least three to five years, causing the regional crisis to linger.
An accident is going to take place, he said.
Mr Delhaise said the image of Asian banks was better than the reality, thanks to creative accounting and their ability to "fake insolvency."
He suggested Malaysia was "a huge accident waiting to happen," Thailand was in bad shape, China was in worse shape than most believed, while Hong Kong and Singapore - with high exposure to problem areas - were also in danger.
Thomson Bank Watch Asia is a team of analysts that monitors more than 300 banks and Mr Delhaise was guest speaker at a function held by the Securities Institute, Australian Institute of Banking and Finance and Institute of Finanacial Services.
He said before the crisis, banks were growing at 25-55 per cent annually as investors poured money into short-term deposits.
"How can any bank, at the best of times, find the right people and right credit control to grow by that much," he said.
The crisis was brought about by those commercial banks that had no option but to grow, and they started making mistakes."
These mistakes were continuing, he said. But despite the gloomy outlook, Mr Delhaise said Asia still offered opportunities. "My guess is that Asia is going to grow back. It's a great region to invest in - carefully and selectively."