Banks in Australia, New Zealand, South Korea and Vietnam are among the most exposed in the Asia-Pacific region to a sudden worsening of Europe's sovereign debt crisis, Moody's Investors Service said.
Bloomberg News reported that The Australian, New Zealand and Korean banking systems' dependence on foreign funding puts them at risk of increased costs in the event of wholesale market stress, Stephen Long, a managing director at Moody's financial institutions group, said in a statement. Vietnam's weak financial system and dependence on cheap dollar loans subjects its banks to tightening foreign- currency liquidity.
These banking systems are more vulnerable to the first- round impact of a further worsening of the euro area crisis than other systems in Asia Pacific, Long wrote after Moody's released a report the topic. Our base case is that the resilience of banks in Asia Pacific will generally persist. However, the risks to that scenario have increased, warranting a closer examination of how banks could be affected under more adverse scenarios. These countries are also closely tided to China who might see huge problems if the EU crisis explodes. Europe is one of China's major trading partners.
Australian and New Zealand lenders' proportion of total external funding stands at 19 percent and 16 percent respectively, New York-based Moody's said. Korea's banking system has a foreign currency-to-deposit ratio of 328 percent and relies on external markets for 9 percent of its funding, the report said.
These banks are not part of the ECB or the EU community and their respective governments have the ability to print money or issue monetary policy indendently, an overflow from Europe could have contagion throughout the region.
Today, the Greek agreements became disagreements after early morning meetings failed to move anyone closer to a final deal. The EU and ECB have set a new deadline for a completed deal, not just an agreement. Everything must be done and concluded no later the February 15th. Yesterday, the ECB gave in and agreed to take a loss on their Greek assets hoping that this would end the political problems with Greece but nothing has come out of these new talks.
AUD/USD Pivot Points (Time Frame: 1 Day)
Name S3 S2 S1 Pivot R1 R2 R3