Persisting risks to Asia Pacific banks: S&P
Standard & Poor's Ratings Services is prepared to consider taking negative rating actions on the banking sector in Asia Pacific, should debt woes in the eurozone lead to a more severe global slowdown.
In a report titled"Credit FAQ: Why Eurozone Risks Could Still Hit The Asia-Pacific Banking Sector In 2012," S&P noted that a strong dependency on exports leaves the Asia-Pacific region susceptible to any flare-up in the European debt crisis.
"We currently consider most of the rated banks in Asia-Pacific capable of withstanding pressures from the eurozone debt crisis at their current rating levels, given their solid financial profiles and good liquidity. However, although risks have diminished across the eurozone, they have not disappeared," it said.
Standard & Poor's base case scenario forecasts a mild recession in the eurozone, with a 40 per cent risk of a more severe outcome. In its view, banks in the eurozone will continue to suffer from fundamental risks despite the recent easing of liquidity conditions underpinned by European Central Bank (ECB) operations.
