Davos Notebook

Challenge for Asian banks is to assert their legitimate right

January 28, 2010

Asian countries have learnt their financial lesson the hard way when they were hit by multiple currency crisis more than a decade ago.

This time around they have fared better than Europe and the United States but they will nonetheless be hit by a West-led regulatory wave that could fundamentally change the way banks operate.

“We never went into a lot of new-fangled financial engineering. A lot of this “sexy” staff was not there,” says V. Shankar, a member of the group management committee of Standard Chartered bank, while in Davos to attend World Economic Forum.

“But whatever changes are done globally, they equally apply to Asian banks.”

Even though Asian heavyweights like China and India have made it into the G20 club of leading nations, they have seemingly played little or no role in shaping up plans for new financial rules. This contrasts with the role large emerging countries are playing in key international organisations like the WTO.

“The big paradox is that the rules are being effectively set by countries that are borrowers. The countries that are lenders, i.e. Asian economies, are going to be a net receivers of changes in banking regulation or in accounting regulation and have very little voice at the table,” he said.

“The challenge for them is to assert their legitimate right.”

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