Asian crisis hits Hong Kong bank

The impact of Asia's financial crisis on Hong Kong's banking sector was thrown into sharp focus yesterday when the Bank of East Asia, the largest locally owned bank, announced its 1997 results, showing a sharp downturn in the second half of last year.

The Bank of East Asia is the first of Hong Kong's large banks to announce results and analysts believe its performance is likely to be mirrored elsewhere. The bank revealed it had written off almost HK$173m (pounds 13.5m) in bad debts. Provision for bad debts rose almost 20 per cent.

The second half of the year saw a sharp downturn in property loans as the market slowed to a crawl and the constantly rising pressure on interbank rates narrowed the customary healthy profit margin on loans.

However, the bank's chairman, David Li, said the second half of this year would see an improvement. He also forecast lower interest rates, which would aid the ailing stock market.

Meanwhile, NatWest Markets, the UK investment bank, announced it had finally abandoned its attempts to create an Asian equities and corporate finance business.

It is selling its Asian investment banking activities to a joint venture formed by the Chinese state-controlled Industrial and Commercial Bank of China (ICBC) and the Bank of East Asia for an undisclosed sum that represents a small premium to present book value.

In a separate development, Banque National de Paris is close to closing a deal for the purchase of the Hong Kong and China equities business of the collapsed Peregrine group, according to Hong Kong media reports. It is likely Francis Leung, one of Peregrine's founders, will run the restructured business.

Meanwhile, figures yesterday from the Association of Unit Trusts and Investment Funds, showed investors withdrew more than pounds 1.2bn from the Far East after Asian economies collapsed. The crisis caused private investors to shift pounds 406m away from unit trusts in the Far East, while pension fund managers withdrew pounds 820m.

By contrast, private investors poured into corporate bonds and fixed- interest funds. The most popular vehicles were index-tracking funds, which received pounds 1bn of new savings against just pounds 355m in 1996.

- Stephen Vines

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test