Four months into the Asian financial cyclone, Australians are hoping that the worst of the storm will bypass their island nation to the south.

Though observers remain confident that Australia can withstand the crisis, they concede that a slowdown in the economy is inevitable, given its trade ties with East Asia.

"Still, economic fundamentals indicate that Australia is well equipped to weather the pressure likely to arrive from Asia," said Yves Lemay, senior vice president for sovereign risk at Moody's Investors Service.

As for U.S. banks with offices in Australia, the Asian financial crisis is likely to have only an indirect impact.

Most of them operate in specialized domains, and most of their business dealings are geared to Australian corporate and institutional customers. The extent to which they are affected by the Asian crisis, observers said, depends very much on the extent to which their customers are affected.

Bankers Trust New York Corp., which has one of the largest and most successful operations in Australia, focuses primarily on investment banking and institutional and individual funds management. The bank earned $103 million last year in Australia, down slightly from $131 million in 1996, after higher personnel expenses and lower trading revenues. As of yearend, Bankers Trust had over $41 billion of asset under management in Australia, up from $37 billion at the end of 1996.

Chase Manhattan Corp. and BankAmerica Corp. concentrate mainly on corporate banking activities such as risk management, custody, trading, and capital markets-related operations.

CoreStates Financial Corp., Philadelphia, is mainly engaged in funds transfers and processing, while State Street Corp., Boston, focuses on custody and fund management and runs its Southeast Asian operations from Sydney.

Citicorp, with 14 branches in Australia and $5 billion of loans outstanding to Australian and New Zealand borrowers, remains the biggest U.S. institution Down Under and the only one active in middle-market and retail banking. It also has a strong local mortgage banking operation.

For some U.S. banks, however, Australia has been a long retreat.

Plunging into the local market after the Australian government agreed to grant banking licenses for foreign institutions in 1985, big U.S. banks set up everything from leasing to merchant banking and consumer banking operations. But many were clobbered by a sharp recession starting in the late 1980s that left Australian and foreign banks with billions of dollars of nonperforming real estate and corporate loans.

Over the next several years, much of the effort among U.S. banks was geared to disposing of their now-unwanted Australian banking units. BankBoston Corp. and the former Chemical Banking Corp. pulled out of Australia earlier in this decade.

Chase, which lost $120 million in Australia in 1991, sold off its stake in Chase AMP Ltd., a $3 billion Australian consumer bank with eight branches, the following year. Two years ago, BankAmerica sold off its Australian subsidiary for $43 million, retaining only corporate banking offices in Sydney and Melbourne.

Though the economic situation today bears no resemblance to the recession of the late 1980s and early 1990s, U.S. banks still face tough competition from well-entrenched Australian banks. Some, such as National Australia Bank, have expanded into the United States to avoid becoming overdependent on the local market.

Among the U.S. banks that have stuck it out, however, the movement has been toward applying innovative financing techniques, such as structured finance, to the Australian market . Last year, for example, the market for asset-backed securities in Australia climbed 30%, to $13.6 billion, and U.S. banks were among the main issuers.

Citicorp, for example, handled the first securitization of corporate loans in a $374 million deal. Bankers Trust arranged a $250 million mortgage securitization for Sydney-based St. George's Bank, and J.P. Morgan & Co. handled the first mortgage-backed issue for Euromarket investors by arranging a $476 million issue for Puma Management Ltd.

The bank arranged a similar but even larger $884 million issue for Westpac Banking Corp. in November."This market will continue to grow," predicted Jill Zelter, a managing director for international structured finance. "A whole new class of assets will be securitized, including commercial mortgages and auto loans."

Still, analysts remain divided over how far Australia's economy could be dragged down by a drop in tourism and exports to Asian countries. The country had an unexpected $600 million monthly trade deficit in December, after a $346 million surplus in November.

Reflecting the sudden deterioration in Australia's trade balance, the Australian dollar has steadily lost ground against the U.S. dollar, falling to 68 U.S. cents this week, compared with an average of 78 cents over most of 1996 and 1997.

Moody's changed its Australia sovereign rating outlook to "stable" from "positive," indicating that it does not expect Australia's rating to improve further. But the agency's main competitor, Standard & Poor's, has left its own outlook for Australia unchanged, at "positive."

"We see no reason to change our ratings," said a spokeswoman for Standard & Poor's.

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