Click Here

Click Here

Government measures should stabilize global banking markets

October 21, 2008: The comprehensive measures governments around the world will carry out to support financial institutions should stabilize the banking industry's day-to-day operating environment and unfreeze debt markets, said Standard & Poor's Ratings Services in a report published recently "Sweeping Government Measures Should Restart Global Banking Markets."

"In our view, this should help restore confidence in the world's banks, allowing investors and counterparties to begin assessing banks again on their business strengths," said Standard & Poor's credit analyst Scott Bugie.

The measures should underpin bank creditworthiness in the short term by shoring up liquidity and augmenting the sector's regulatory capital. We do not expect, however, that these actions in themselves will improve fundamental earnings and asset quality, which will remain under pressure for financial groups in the U.S., Western Europe, and several countries in Eastern Europe and Asia. In addition, the differences among various countries' support packages, and their complexity, may delay the measures' initial impact.

"We view positively the support measures from our credit perspective, particularly since they greatly reduce financial institutions' risk of a rapid loss of funding and sudden default," said Mr. Bugie.

The proposed government measures collectively represent a seismic shift in the global banking industry because they provide explicit evidence that states around the world stand behind their banking industries. In our opinion, this shift alone should help restore confidence in the debt markets. However, the support measures are designed to be temporary and to be mostly paid for at market prices. They also differ substantially from jurisdiction to jurisdiction, and banking groups will partake of the support to varying degrees, or not at all. So, although the measures stand to restore confidence, their effectiveness may vary from country to country and bank to bank.

Changes of this magnitude will be more complex to implement than they appear at the beginning, and they may have unpredictable consequences. Governments, in our view, will have to work out the details of the rapidly announced support measures over the next few weeks.

(This is press release of Standard & Poor's)


IMF Welcomes Comprehensive European Response to Financial Crisis
IMF sees heightened risks to global financial stability
Global banking industry to see more restructuring & consolidation
Indian Banking sector challenged by domestic, not global, factors
Indian banking system is stable and sound, says RBI Governor
Indian Government sets up group to assess liquidity requirements
US Financial Crisis to indirectly impact Asian banks
Limited impact on Asia-Pacific banks from Lehman bankruptcy
Broader Implications of Lehman bankruptcy and Merrill Lynch acquisition
Subprime Crisis: A Special






      Banking | Technology | Finance | Advertise | Terms of use | Disclaimer | Contact us
                         Banknet India | All rights reserved worldwide.