Asian bad debts rise

Asian bad debts rise

KUALA LUMPUR (Dow Jones): Barclays Capital expects non- performing loans in Asia to dwarf the extent of bad debt incurred during the Latin American banking crisis, according to a research report received yesterday from Barclays Capital.

"Non-performing loans in Indonesia could peak around 75% by the end of this year. In Korea, a level above 40% is likely, while in Thailand and Malaysia, a figure significantly above 30% is expected," the report says.

"Given the high degree of leverage in Asian economies, these non-performing loans are even more sizable when seen as a percentage of gross domestic product: in these four Asian countries, non-performing loans will conservatively peak at between 35%-50% of GDP."

Barclays notes that non-performing loans peaked at 9% of total lending in Brazil, 11% in Mexico and 17% in Venezuela during the "Tequila" crisis.