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Change Your Life! |
Private sector frets over health of Asian banks |
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May 8, 2000
CHIANG MAI, Thailand, MAY 7 (AP) - Private sector bankers attending the Asian Development Bank's annual meeting were unimpressed Sunday by moves by Asian countries to protect their currencies, but showed worries over the health of Asian banks.
Thirteen East Asian countries agreed on the sidelines of the bank's meeting Saturday to set up arrangements to rescue each others' currency in case of speculative attacks like those that triggered the Asian economic crisis in 1997.
But private sector investors took little notice of that initiative and instead urged Asian finance ministers to remove the vulnerabilities in their banking systems now that economic recovery appears on firm footing.
Citigroup Inc. Vice Chairman William Rhodes said there has not been the "restructuring we would like."
The frank acknowledgment of problems in the Thai banking system by Banthoon Lamsam, president of Thai Farmers Bank, Thailand's third-largest commercial bank, was one of the weekend's highlights.
Speaking off-the-cuff, Banthoon told a packed seminar that bank management is the underlying challenge and "we're not up to speed."
"A substantial number of people working in Thai banks are hopeless for addressing the current environment," Banthoon said. "What one cannot buy is a new culture."
Banthoon said his largest source of strain as new competition arrives from foreign giants Citibank, ABN-Amro and HSBC is their ability to take his best talent.
Standard & Poor's Corp., an international credit-rating agency, raised a host of concerns about long-term health of the banking systems in Asian countries. The issues went far beyond the need to reduce levels of non-performing loans.
"There are more factors than just the technical insolvency issue that you have to deal with," said Ernest Napier, a New York-based financial sector analyst at Standard and Poor's.
Specifically, Malaysia's efforts to keep out foreign banks means a long-term negative for the country, since it will delay movement toward greater market-based lending decisions, Standard and Poor's analysts noted.
Another problem is that China's asset management companies have a questionable amount of autonomy from commercial banks, which may mean they shift, rather than solve, the nation's bad-loan problem.
Standard and Poor's also warned of the chance that Japan's newly created mega-banks will emerge as bad-loan warehouses and pose an even larger systemic threat to the world financial system than they did separately.
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