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

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Highs and lows of the cast's careers since 2004
News
news
New Articles
i100... with this review
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
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

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam