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Asian bank capital: keeping it local 

February 16, 2015

Chien Mi Wong, FinanceAsia

Asian financial institutions will continue to raise capital this year in order to meet the upcoming Basel III deadline in 2019, fortifying their balance sheets as they go.

When it comes to their currency options, they are spoilt for choice these days. Debt capital market bankers expect new local currency-denominated Basel III-compliant issuance in this neck of the woods to continue outpacing new debt denominated in dollars and euros given that it's much cheaper to raise it domestically.

Although regulators have been nagging domestic financial institutions to diversify beyond their borders, cost of funding will outweigh such considerations in the minds of the banks.

"These instruments will primarily go into the local currency market because they can price them more cheaply," Pramod Shenoi, head of capital solutions for DCM financial institutions group at Standard Chartered, told FinanceAsia. "For the Chinese banks, it makes complete sense to try to issue as much locally as possible."

Read More: FinanceAsia

 
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