Progress in Asia patchy: banker

By Richard Braddel

Asia's economic rebound has been impressive, but it still has a long way to go in recovering to 1997 levels and in building infrastructure to ensure the financial crisis is not repeated.

Vincent Cheng, the chief executive of Hong Kong banking giant Hang Seng, says that while the region has recovered in domestic currency terms, it is still a long way from where it was when US dollar values are applied.

And in spite of the wake-up call to restructure Asia's banking sector, progress has been patchy.

Mr Cheng, who was a post-graduate student in economics at Auckland University, says South Korea has yet to restructure its industrial conglomerates and many banks in the region are still overburdened with bad loans and need to be recapitalised.

"Some countries have done their best by opening their domestic banking sectors."

Hang Seng, which is a subsidiary of the global banking giant HSBC, itself has a non-performing book equal to 4 per cent of loans and wrote off $US100 million in the previous financial year.

While its non-performing loans are four times the value in 1997, they are modest both in terms of the bank's capital and compared with many other banks in the region.

Echoing a common call at the Apec CEO Summit, Mr Cheng says Asian banks and businesses have to catch up with their European and US counterparts in terms of transparency and corporate governance.

While business has grown at a phenomenal rate, the regulatory and prudential supervisory frameworks have not kept up.

And without proper corporate governance, it is impossible for banks to accurately determine the financial position of corporates and so determine lending risk.