Jeffrey Sachs

By Kim Jae-won

MANILA ― The lingering Euro zone crisis can be a boon for Asian banks as they can fill the financial void on the continent instead of European banks, said Douglas Peterson, head of Standard & Poor’s (S&P) Ratings Service Friday.

Peterson said that Asian credit markets have the opportunity to help fill the funding gap for companies and projects in the region that struggle to secure sufficient and cost-effective funding from traditional banking sources.

“Given the stretched banking systems across the globe, alternative sources of financing will need to be found, and we believe that Asian credit markets have an opportunity to help fill the funding void if developed further,” said Peterson during a luncheon seminar at the 45th annual general meeting of the Asian Development Bank (ADB) in Manila.

S&P estimates that bank loan and debt capital markets will need to finance more than $40 trillion won of corporate borrowings between now and mid-2017 in the world’s biggest economies such as the United States, Europe, China and Japan.

However, Peterson said that it is a tough job to attain and Asian banks should be developed further to achieve the goal.

“Coping with the huge demand for credit will be a challenge for banks and capital markets in the coming years,” he added.

The S&P president said the region’s policymakers have the challenging task of more effectively channeling surplus funds and the savings within the region. That will be crucial to stimulating domestic demand and tackling ongoing global imbalances.

Gerald Lyons, chief economist of Standard Chartered Bank, said that Asia has the potential to grow, but politicians are not prepared yet. Lyons was one of the five panelists in the seminar hosted by S&P.

He argued that foreign investors flock to the region for investment opportunities, but the governments in the region lack the understanding and skills to manage them.

Lito Camacho, managing director of Credit Suisse Asia-Pacific, said that Asian countries need to move their markets faster to absorb abundant liquidities in the region.

“We are not satisfied yet. We should move our markets faster.”