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Country risk survey monitoring political and economic stability of countries around the globe

December 1997

Asian banks: Now comes the real crisis


Forget forced devaluations, plummeting stock markets and widening bond yields, south-east Asia's greatest headache is its weak banking sector. While central bankers looked the other way, the region's banks lent heavily to finance stock-market speculation, overexposed themselves to property and made dubious loans to their own shareholders. As Maggie Ford reports, it is time for the reckoning.


When the world started to melt

What will go wrong next?
Asian research: Worth the paper it's printed on?
Peregrine's still flying
Hedge funds: You can run but you can't hide
Country Risk December 1997: It could be worse
Global Economic Projections: Overall Rankings


Korea fingers the nettle

When Indonesia unveiled the measures to be imposed as part of a $23 billion economic stabilization programme backed by the IMF last month, a key condition was a clean-up in the banking sector. Making a start, finance minister Marie Muhammed and central bank governor Soedradjat Djiwandono announced the closure of 16 small and insolvent banks out of Indonesia's grand total of more than 230.

Out from the woodwork immediately crawled some of the most colourful characters ever to don a pinstriped suit. Shareholders of the liquidated banks included the sultan of Yogjakarta, scion of the former Indonesian royal family, and two children...


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