SYDNEY - Chase Manhattan Corp. is "perfectly comfortable" with its exposure to risk in Australia, even though the country's foreign debt burden has been climbing, said Arthur Ryan, president and CEO of the banking company.
"I think Australia has a very manageable cross-border risk but it is also at a very critical point," Mr. Ryan told reporters here.
"At present, we are perfectly comfortable with our risk, but we are reassessing all the time," he said.
Australia's net foreign debt reached the equivalent of $109 billion U.S. in the second quarter of 1992. Other economic problems have caused losses at foreign banks operating in the country.
Mr. Ryan said Chase measures its risks country by country, but its decisions are strongly influenced by capital markets.
Mr. Ryan said Chase's current strategy is to build an international network of operations that include risk and cash management, corporate finance, capital markets, and trade services.
"Close to 40% of our earnings are generated" from outside the United States, Mr. Ryan said. "Over time, we expect that to be in the 50-50 range."
No Retail Ambitions
Chase is considering converting its wholly owned subsidiary in Australia to branch status, but does not intend to set up retail operations, he said.
Mr. Ryan said the local unit, Chase Manhattan Bank Australia Ltd., was performing well in all areas and would return to profit in calendar 1993.
"We expect to see a profit for the year to December of around $10.8 million and we would expect to grow that next year also," he said.
Chase Australia made a net profit equivalent to $3.9 million U.S. for the first half after a loss of $6.9 million in the 1991 half.
The New York-based parent has taken 100% control of what was formerly a 50-50 joint venture with the Australian Mutual Provident Society and its retail operations sold.
Chase has a joint venture with AMP holding bad loans of the previous Chase-AMP Bank. Mr. Ryan said provisions were sufficient and the venture should be unwound in about two years.
No Capital Needs
"Our need for either directly raising capital or for infusing more into any of our subsidiaries is well behind us," he said.
Chase Manhattan Australia managing director Scott Reid said the decision to convert to a branch hinged on funding benefits and tax implications, which had yet to be finalized by Canberra.
"Clearly, all things being equal, we would like to be a branch," Reid said.
