Asian banks better placed to survive stress: S&P

MUMBAI: Standard & Poor's Ratings Services on Tuesday said a financial crisis similar to the one that hit Asia in 1997, is unlikely to recur.

"Banking systems in the region are now in a better position to weather possible stress," it said in its 'Asia 1997 Retrospective' series of three reports published on Tuesday.

Key factors that set the scene for the crisis are no longer as prevalent now as they were in 1997, the report said.

"Unlike the situation in 1997, Asian companies now have lower foreign currency debt exposure or hedging policies against foreign exchange risk, and sovereigns have bolstered their external positions with stronger reserves," S&P's credit analyst, Terry Chan, said.

"Nevertheless, the overall increase in the debt of sovereigns and, to a lesser extent, corporates remains a concern," he said.

The report examines nine system risk factors in 2005, including banking system structures, government debt and international reserves and offers a comparison with the situation in 1996.

The study covers the 10 Asian financial systems of China, Hong Kong, Indonesia, India, Korea, Malaysia, the Philippines, Singapore, Taiwan and Thailand.

The 'Asia 1997 Retrospective: Today's Banks Likely to Survive Stress Scenarios' said that Asia's banking systems have strengthened since 1997, although some are yet to regain their full pre-crisis credit strength.