Asian bank capital: keeping it local

Explosion in Basel III-compliant instruments expected to continue, especially in local currencies.

Asian financial institutions will continue to raise capital this year in order to meet the upcoming Basel III deadline in 2019, fortifying their balance sheets as they go.

When it comes to their currency options, they are spoilt for choice these days. Debt capital market bankers expect new local currency-denominated Basel III-compliant issuance in this neck of the woods to continue outpacing new debt denominated in dollars and euros given that it’s much cheaper to raise it domestically.

Although regulators have been nagging domestic financial institutions to diversify beyond their borders, cost of funding will outweigh such considerations in the minds of the banks.

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