Beware of the information obtained from Asian banks, warns Philippe F. Delhaise, president of Thomson BankWatch Asia. Getting the facts requires using unorthodox means, he says.
After 22 years in Asia, Belgian-born Mr. Delhaise cautions that in analyzing Asian businesses what you see is not what you get. Ratings are helpful in discerning the relative safety of banks in an individual country, but because of different accounting and reporting standards, the ratings lack the reliability of those of U.S. companies.
Thomson BankWatch is part of Thomson Financial, the parent of American Banker.
Mr. Delhaise is particularly candid about the limits of his ratings, but his competitors have similar concerns.
"There is far less information in the public domain in Asia, whether it's accurate or inaccurate," says Ernest Napier, managing director for Asian financial institutions at Standard & Poor's Rating Services.
"Creative accounting is an art in Asia," Mr. Delhaise says. His advice: "Don't believe any figures you get."
The 51-year-old executive attributes the difficulty in getting accurate information to faulty disclosure, loose accounting practices, government interference, deregulation, and rapid economic growth.
In tracking some 400 Asian banks in 15 countries, Mr. Delhaise uses unorthodox means to get the facts.
"We do a lot of spying on banks, often through friends of friends," he says.
One tip about a Hong Kong bank's heavy losses in China came from a gossipy airline flight attendant complaining about her banker husband's long trips to China. Another tip about shaky construction loans at a Thai bank came in a secret meeting with a real estate developer in Bangkok.
"All Asia is built on networking," he says. It works on the theory that "I may not know the answer, but I know someone who does." Mr. Delhaise said. "Your best source of information is a network of friends and acquaintances around the region." And he adds, "that takes years to build."
Mr. Delhaise began his career with Belgium's Generale Bank in 1973, after earning a master's degree in economics from Belgium's University of Louvain and an MBA from the University of Chicago.
After serving in the Middle East, the bank transferred him to Hong Kong in 1978 and to Tokyo two years later. In 1981 he became head of the bank's Singapore branch, and in 1984 he took over the bank's Hong Kong subsidiary, heading a staff of 500. A year later, he resigned. "I got bored," he said.
Mr. Delhaise then formed a rating agency known as Capital Intelligence Services, which was acquired in 1994 by New York-based Thomson BankWatch.
Despite the difficulties in rating Asian banks, Mr. Delhaise is bullish about the continent's long-term prospects. "The real strength of Asia is that if things don't go the way planned, they just try another way."