Asia’s regional banks fill the vacuum of retreating global banks
Caught between the rock of Basel III and the hard place of sovereign debt instability, international banks have been retreating from Asia’s credit markets. As local banks ramp up their offering, does this mark the end of the suitcase banking model?
Asian banks have spent recent years accumulating sizeable reserves and capital buffers that in many cases exceed the capital requirements set in the most recent draft of Basel III. According to a February report by Standard & Poor’s, the average risk-adjusted capital (RAC) for European Union banks was 6.8%, against 8.1% in Asia ex-China and Japan, while in some countries such as France the RAC was just 5.9%.
This has given Asian banks liquidity and credit appetite to deploy in the market, while
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