Plans by US President Barack Obama to curb risk-taking by banks are unlikely to adversely affect Asia’s risk-averse financial institutions, analysts said.
The proposed measures, which aim to roll back corporate excesses and limit dangerous risk-taking on Wall Street, could even be beneficial to Asia because US banks may have to move their hedge fund businesses to the region, they said. Shane Oliver, an economist with Australia’s AMP Capital Investors, said it was unlikely regulation of Asian banks would be beefed up.
“Asian banks didn’t run into the sort of trouble that the US ran into through this crisis and it’s unlikely that we’ll see radical regulatory change across Asia,” he said. “There’s no need [for Asia’s regulators] to be heavy-handed in the way that President Obama is.”
Daniel Tabbush, head of regional banks research for Hong Kong-based brokerage CLSA, said that except for banking giant HSBC — which has a major presence in the US — he did not see any banks in Asia being threatened by Obama’s proposals.
Shinichi Ina, a Credit Suisse analyst in Japan, said that the plan, if passed by the US Congress, would likely be limited to operations in the US.
“For it to take effect in Europe or Japan you’d have to ask cooperation from regulators there and engineer a comprehensive regulation scheme,” he said.
Although Asia’s financial institutions did not escape the worldwide financial crisis completely unscathed, their losses were dwarfed by those suffered by their Western peers — thanks at least partly to lessons learned from the Asian financial crisis of 1997, which left the region with a more prudent investment approach.
Most of the Asian banks are commercial with relatively small investment banking services and very little proprietary trading, said Billy Mak (麥萃才), associate professor of finance at Hong Kong Baptist University.
And unlike many central banks in the West, countries like India and China already have a liquidity requirement in place, he said.
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