By Anoop Singh
European banks play an important role in supplying credit to several Asian economies. What happens if they start reducing their exposure to the region?
The largest borrowers from European banks are Australia, Hong Kong SAR, Korea, Malaysia, New Zealand, Singapore, and Taiwan Province of China, while China, India, and the economies of South East Asia generally have smaller liabilities.
Among European banks, those from the United Kingdom have a particularly significant presence in Asia. For most regional economies, the nonbank private sector—businesses and households—is the main recipient of credit from foreign banks as a whole.
European banks play a prominent role in the areas of trade credit and specialized project financing. In several Asian economies, however, lending by local subsidiaries and branches is funded primarily by local deposits, reducing potential deleveraging pressures.
Filed under: Asia, Economic Crisis, Economic outlook, Emerging Markets, Employment, Europe, Finance, Globalization, International Monetary Fund, Investment, Politics, recession | Tagged: Anoop Singh, ASEAN South East Asia, Australia, banks, Bear Stearns, deleveraging, Hong Kong SAR, iMFdirect, Korea, Lehman Brothers, Malaysia, New Zealand, Singapore, Taiwan Province of China, United Kingdom | 1 Comment »