Asia a limited problem for Japanese banks<\/p>\n
TOKYO (Reuters): Asia's financial crisis will cause only
\nlimited problems for Japanese banks, although they are the
\nregion's major creditors, bankers and analysts say.<\/p>\n
Japanese lending in the region is not necessarily riskier than
\nthat of European or U.S. banks, because not only do Japanese
\nbanks do a lot business with offshore Japanese firms, but they
\nhave been lowering their presence in Asia recently, they said.<\/p>\n
Many Japanese banks established themselves in Asia before
\ntheir competitors did and many borrowers are companies related to
\nJapanese manufacturers, they said.<\/p>\n
\"We tapped into Asia decades ago to set up a base for Japanese
\ncompanies to do business there,\" said a senior manager at a major
\nJapanese bank, who declined to be named.<\/p>\n
\"Unlike European banks, Japanese banks were cautious about
\nlending to Asia during the critical six-month period before the
\nregional currency turmoil began in July,\" said Ryozo Hattori, an
\nanalyst at Daiwa Institute of Research Ltd.<\/p>\n
Thailand's devaluation of its currency last July sparked a
\nregional financial crisis which resulted in the International
\nMonetary Fund providing rescue packages worth a total of more
\nthan $100 billion for Indonesia, South Korea and Thailand.<\/p>\n
According to data of the Bank for International Settlements,
\nthe share of Japanese banks among foreign banks' loans to Asia
\nedged down by the middle of last year.<\/p>\n
It fell to 31.8 percent at the end of June 1997, down from
\n32.3 percent at the end of 1996 and from around 39 percent in
\n1994. In contrast, European banks had increased their share to
\n43.8 percent by the end of June 1997, up from 42.2 percent six
\nmonths earlier.<\/p>\n
Daiwa's Hattori said borrowers in Thailand are mostly
\ncompanies of Japanese origin, and there are few loans to
\ninsolvent Thai financing companies.<\/p>\n
Thailand ranks third behind Hong Kong and Singapore in terms
\nof Japanese bank lending to Asia.<\/p>\n
Because South Korea is fourth, Japanese banks found some
\nrelief last week when international creditors agreed with a plan
\nto exchange short-term debt to the nation for new long-term
\nloans.<\/p>\n
But the analysts and bankers said major banks, including the
\ntop creditor to Asia, Bank of Tokyo-Mitsubishi Ltd (BTM) , may
\nhave to add at least some risk provisions, given worsening in
\ncredit ratings of their loans to the region.<\/p>\n
\"Japanese major banks' business results in 1997\/98 will be
\nlightly influenced by the Asia issue, and that may continue into
\n1998\/99,\" said Naohiko Hasegawa, an analyst at Nikko Research
\nCenter Ltd.<\/p>\n
Deutsche Bank AG , also a big creditor to Asia, said last week
\nits exposure to Asia dampened 1997 operating profits.<\/p>\n
The bank's credit exposure to South Korea, Thailand, Malaysia
\nand Indonesia amounted to nine billion marks (US$4.92 billion),
\nfor which it said it was setting aside one billion marks in risk
\nprovisions. A further 400 million marks was being set aside to
\ncover other Asian risk.<\/p>\n
According to BIS data, Japanese banks' exposure to these four
\ncountries totaled $95.1 billion at the end of June 1997.<\/p>\n
Exposure of German banks, the second-largest creditors to
\nthese nations, totaled at $29.7 billion.<\/p>\n
\"Major Japanese banks' lending to Asia may have some impact on
\ntheir business, but this will be negligible in the year ending
\nnext March because their domestic problem loan mess is massive,\"
\nsaid Daiwa senior analyst Akira Takai.<\/p>\n
BTM said when it closed its books last September that problem
\nloans of its branches in South Korea, Thailand, Malaysia,
\nIndonesia, Hong Kong, Singapore, China, Taiwan and the
\nPhilippines amounted to 0.15 percent of its total exposure to the
\nregion. That ratio was much smaller than the bank's bad debt
\nratio versus total loans, which was 2.11 percent.<\/p>\n
BTM's total lending to these nations was $27.4 billion at the
\nend of September.<\/p>\n
BTM is one of the few Japanese banks to disclose country-by-
\ncountry exposure figures.<\/p>\n
A spokesman at Sanwa Bank said it had a total 2.5 trillion
\nyen ($19.6 billion) worth of loans to Asia at the end of
\nSeptember and had set aside sufficient funds then to cover that
\nexposure.<\/p>\n
\"We understand the situation is changing... We will disclose
\ninformation when needed,\" the spokesman said.<\/p>",
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