Japanese & Australian Banks: Moderate Exposure to China, Hong-Kong and Taiwan
DBRS Morningstar has released a commentary focusing on Japanese and Australian banks’ exposures to China, Taiwan and Hong Kong.Key points include:
• In a scenario of an escalation in tensions surrounding Taiwan’s status, indirect risks could have some implications for Japanese and Australian banks as they have some operations in these regions.
• The total credit exposure of Japanese and Australian banks to China, Hong Kong and Taiwan is moderate representing a relatively low proportion of consolidated credit exposures.
• However, for the three largest Japanese banks, exposure to these regions represent a significant proportion of the banks’ Common Equity Tier 1 (CET1 ) capital.
“The large Japanese and Australian banks’ exposures to China, Taiwan and Hong Kong appear manageable, notes Maria Rivas, Senior Vice President, DBRS Morningstar. “Moreover, it remains important to note that Japanese and Australian banks have funding strategies and continuity plans in place to prevent disruption in the event of an escalation of tensions between China and Taiwan.”
Australia and New Zealand Banking Group provides a range of banking and financial products and services to retail, small business, corporate and institutional clients. Co. operates on a divisional structure with six divisions: Australia, Institutional, New Zealand, Wealth Australia, Asia Retail & Pacific and Technology Services & Operations and Group Centre. Co.'s core products offered include deposits, credit cards, loans, investments and insurance, retail products provided to consumers, and banking and financial solutions provided to business customers through managers, among others. As of Sept 30 2015, Co. had total assets of A$914,869,000,000 and total deposits of A$566,847,000,000.
Commonwealth Bank of Australia provides integrated financial services including retail, business and institutional banking, funds management, superannuation, life insurance, general insurance, broking services and finance company activities. Co. operates in seven segments, Retail banking Services, Business and Private Banking, Institutional Banking and Markets, Wealth Management, New Zealand, Bankwest, as well as International Financial Services and Other Divisions. As of June 30 2016, Co. had total assets of A$933.1 million and total deposits of A$588.0 million.
National Australia Bank provides banking services, credit and access card facilities, leasing, housing and general finance, international banking, investment banking, wealth management, funds management, life insurance and custodian, trustee and nominee services. Co.'s division include: Australian Banking, which provides products and services to retail and business customers; National Australia Bank Limited Wealth, which provides superannuation, investment and insurance solutions; and New Zealand Banking, which comprises the Retail, Business, Agribusiness, Corporate and Institutional and Insurance franchises in New Zealand. As of Sept 30 2016, Co. had total assets of A$777.62 billion.
Westpac Banking is a banking organization with branches, affiliates and controlled entities throughout Australia, New Zealand, Asia and in the Pacific region. Co. provides a range of banking and financial services in these markets, including consumer, business and institutional banking and wealth management services. Co. is engaged in the provision of financial services including lending, deposit taking, payments services, investment portfolio management and advice, superannuation and funds management, insurance services, leasing finance, general finance, interest rate risk management and foreign exchange services. As of Sep 30 2017, Co. had total assets of A$851,875,000,000.
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