Big and small banks in Southeast Asia will survive the region's current financial crisis, but medium-size banks may have trouble pulling through, according to an analyst with credit-rating agency Thomson BankWatch.
"Big banks are too big to fail, and it doesn't cost much to bail out small banks," said Phillip Delhaise, president of Thomson BankWatch's Asian unit.
"The danger is the banks in between."
Mr. Delhaise's remarks came at a conference sponsored by Thomson BankWatch, a sister unit of the American Banker, in which rating analysts reviewed banking systems throughout the world.
Asian financial markets have been of particular concern over the last several months as a result of a sharp fall in Asian stock markets and currencies and a rise in defaults on bank borrowings.
According to reports from several sources, some big U.S. banks have also lost heavily on lending in the region.
But Mr. Delhaise estimated that such losses constituted only a small percentage of the banks' overall balance sheets.
Smaller U.S. banks have also stepped up their lending for both trade and project finance over the last few years as a result of growing trade with the region.
Out of some 350 banks in Asia outside Japan, the BankWatch analyst estimated that 200 are bankrupt. Despite pressure on governments in the region to let a number of banks go under, most will get bailed out at the taxpayer's expense, the analyst predicted.
Mr. Delhaise noted that the situation varies by country and by bank, and that it is difficult to generalize.
He also predicted that several countries are likely to experience increased financial turmoil before they see any improvement.
But he was particularly negative about prospects for South Korea and Thailand. "Unless Korea changes its ways, banks will never get out of the mess they're in," he said.
Thailand, he added, "is a disaster zone, and it's going to get worse."
As for the Philippines, he said, even if banks have not yet run into major difficulties on their lending, they will likely have problems as a result of high operating costs.