Asia needs to establish an Asian-owned and managed rating agency as years of Western domination of finance has created an inherent systemic bias impeding the progress of Asian banks.
CIMB group chief executive Datuk Seri Nazir Razak said this was necessary, especially since Asia was the main supplier of investment funds.
“It seems that even when Asians look at one another, we tend to use Western spectacles. The clearest evidence is our reliance on global credit rating agencies,” he said in his keynote address at the Third Euromoney Thailand Investment Forum in Bangkok, Thailand, yesterday.
Nazir said he could not understand the basis of China, the world’s biggest lender, being accredited “A1″ by Moody’s compared with “AAA” for the UK and “AA2″ for Italy.
“Fitch is no different: China at ‘A+’, UK at ‘AAA’ and Italy ‘AA-’. The story is not too different for bank ratings: Asia’s lowly leveraged banks versus US and European banks with ‘intoxicated’ balance sheets.”.
Nazir said ratings affected how banks allocated capital and influenced the level of transactions conducted between banks, adding that sovereign ratings also defined the ceiling for national bank and corporate ratings, amplifying ramifications of the problem.
“As if that isn’t enough, the introduction of Basel II would compound the problem as loans would also be subjected to ratings, trapping the entire credit system in this biased web.”
He also said that the current crisis, which started in the US, provided a unique window of opportunity for Asian banks to decisively alter the share of global banking in their favour.
“Once Asians have a greater share of global finance, I think that we will also see a more balanced and equitable world where Western perspectives give way to global perspectives, where a new financial architecture is designed without prejudices and where intra-Asian trade and investment flows grow exponentially.”
Source: Intellasia.net, Busines Times Malaysia 11.06.2009
Filed under: Asia, China, Data Vendor, India, Malaysia, News, Risk Management, Thailand, Asia, CIMB, Datuk Seri Nazir Razak, Fitch Rating, Malaysia, Moody's Rating, Rating, Risk Management
