BSS, Dhaka :
Three key risks will continue to dominate the global banking landscape in 2015, diminishing government support, soft economic conditions and evolving regulation, Standard & Poor’s (S&P) Ratings Services said in a report Thursday.
The global rating agency in its half-yearly update titled “The 2015 Global Credit Outlook for Banks: Mid-Year Update” identified that economic conditions, Greek Exit and pending regulatory reform will continue to influence the banking activities in many countries across world.
“Economic conditions are providing limited tailwinds for banks, although we believe that most are well-placed to absorb growth that is somewhat weaker than we currently expect. However, unexpected developments, such as a disorderly decline in the Chinese property market, could result in downgrades”, the update pointed out.
It said while contagion risks from a potential Greek exit from the euro zone are lower than in 2010-2011, such an event could increase risk aversion among investors, lenders, and consumers, weakening the upturn we currently expect.
The updated noted that many of the rules and timelines for bank regulatory reform are now largely known, but completion of the agenda is still a source of ratings uncertainty.
“The scope and complexity of the reforms over the past five years are historic, we believe. And although most components of existing banking reforms in our view make sense on their own, the cumulative impact of these and future regulatory changes is still unclear and may have unintended consequences”, it said.
In Asia-Pacific, the S&P said, “our outlook for credit quality for the region’s 266 financial institutions across 19 jurisdictions (on June 30, 2015) continues to remains broadly stable.”
The rating agency said among the key credit factors for Asia-Pacific banks, the domestic economic trends will generally remain supportive of continuing ratings stability.
“While the weakening Chinese property market could have negative knock-on effects in the short-to medium-term on domestic financial institutions, the country’s recent equity market volatility should be manageable in terms of ratings on most of the financial institutions we rate in China and elsewhere throughout Asia-Pacific”, it said.
The S&P said underpinning our expectation of continuing ratings stability; many Asia Pacific governments continue to remain highly supportive towards their banking sectors, in contrast with some jurisdictions in Western Europe and North America.
Three key risks will continue to dominate the global banking landscape in 2015, diminishing government support, soft economic conditions and evolving regulation, Standard & Poor’s (S&P) Ratings Services said in a report Thursday.
The global rating agency in its half-yearly update titled “The 2015 Global Credit Outlook for Banks: Mid-Year Update” identified that economic conditions, Greek Exit and pending regulatory reform will continue to influence the banking activities in many countries across world.
“Economic conditions are providing limited tailwinds for banks, although we believe that most are well-placed to absorb growth that is somewhat weaker than we currently expect. However, unexpected developments, such as a disorderly decline in the Chinese property market, could result in downgrades”, the update pointed out.
It said while contagion risks from a potential Greek exit from the euro zone are lower than in 2010-2011, such an event could increase risk aversion among investors, lenders, and consumers, weakening the upturn we currently expect.
The updated noted that many of the rules and timelines for bank regulatory reform are now largely known, but completion of the agenda is still a source of ratings uncertainty.
“The scope and complexity of the reforms over the past five years are historic, we believe. And although most components of existing banking reforms in our view make sense on their own, the cumulative impact of these and future regulatory changes is still unclear and may have unintended consequences”, it said.
In Asia-Pacific, the S&P said, “our outlook for credit quality for the region’s 266 financial institutions across 19 jurisdictions (on June 30, 2015) continues to remains broadly stable.”
The rating agency said among the key credit factors for Asia-Pacific banks, the domestic economic trends will generally remain supportive of continuing ratings stability.
“While the weakening Chinese property market could have negative knock-on effects in the short-to medium-term on domestic financial institutions, the country’s recent equity market volatility should be manageable in terms of ratings on most of the financial institutions we rate in China and elsewhere throughout Asia-Pacific”, it said.
The S&P said underpinning our expectation of continuing ratings stability; many Asia Pacific governments continue to remain highly supportive towards their banking sectors, in contrast with some jurisdictions in Western Europe and North America.
