An interesting research study on the rise of regional banking in Asia has recently been published by the Bank for International Settlements.
If you are part of the corporate Asian banking community, this is an interesting read and worth taking a look at.
The Rise of Regional Banking in Asia Pacific
Bank for International Settlements [LINK]
Firstly, if anyone says to me that Asian banks didn't suffer substantial outcomes from the Global Financial Crisis, they are mistaken. International bank lending dropped by US 120 billion during the 2008 and 2009 market rout but that was then, today regional bank lending across Asia has quadrupled since.
With market wide systemic shocks of the kind found in the Global Financial Crisis, there are often winners and losers. Such risk events can have positive outcomes too and for Asian banks, the market was washed clean of European competition. The old order of the day have been stepping in to fill the lending vacuum left by the casualty wake of GFC too big to fail financial institutions.
The Global Financial Crisis certainly did have an impact on local Asian banks, a positive impact.
It isn't all blue skies, such opportunities don't come without their costs and there are some warning signals on the horizon that need close monitoring.
There has been some juggling of front runners at the top between Hong Kong and Singapore. Local banks will also need to improve the sophistication of their market and counterparty risk functions to meet the diverse challenges found in offshore wholesale funding of local debt.
Cross-border finance and US dollar loans to businesses on the ground paying costs in local currencies, sets up the stage for wrong way risk hazards not dissimilar to the Thai Baht structure that fuelled the Asian Financial Crisis of 1997.
Anyway this space is definitely on the move and as Asian regulators align their agendas further, we can expect to see the rise of Asian lending to continue unabated.