cloche rappelled: TEXT-S&P: Major Asia-Pacific Banks Ramp Up Cross-Border Lending

Tuesday, July 31, 2012

(The following was released by the rating agency)

TOKYO (Standard & Poor's) July 31, 2012--Slower markets at

home are spurring Asia-Pacific banks to look abroad to boost

growth, Standard & Poor's Ratings Services said in a report

published today.

"Major banks in Hong Kong, Singapore, Malaysia, Taiwan, and

Japan are seeking higher yields and growth opportunities in

cross-border loans, mainly within Asia," said Naoko Nemoto, a

credit analyst at Standard & Poor's.

"Even China's major banks--which enjoy relatively high

margins at home--have increased their appetite for overseas

exposure to diversify their revenue and deliver better services

to clients. We expect this trend to continue for at least

several years, while asset reductions by European banks could

create more opportunities for Asia-Pacific banks to boost their

presence in global markets," she added.

Although higher credit and operational risks, and a greater

reliance on foreign currency funding, threaten to counter the

benefits of increased returns and revenue diversification,

Standard & Poor's expects most banks will avoid any significant

erosion of their credit quality, given their cautious strategies

and improved risk management.

"We expect that the future benefits and risks of the banks'

forays overseas will largely depend on how they execute their

strategies and adapt to new environments," Ms. Nemoto said.

According to the report, major banks in Asia-Pacific have

increased their credit exposures at a faster pace overseas than

in their home markets. Banks in Singapore, Hong Kong, and China

have recently shown particularly rapid overseas growth, which

has outpaced growth in their domestic markets.

cloche rappelled