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| Smith: saw good Asian companies hit along with the bad |
When the financial crisis broke across Asia in the second half of 1997, the best companies were hit just as hard as the good. It was a shock of such sudden appearance and virulent intensity that no-one could have been prepared for it. "Even the top Hong Kong land companies with very conservative gearing levels of 20% or less and family owners measuring their net worth in billion of dollars - who must have thought that nothing much could harm them and that a crisis might even help the strong companies to stand out - suddenly found that banks simply stopped lending to them. The head offices of many Japanese, European and American banks completely reined in their Asian operations," recalls Alan Smith, vice-chairman of CSFB in Asia. And with the domestic Asian banks drowning in bad debts, the result was a temporary seizure in credit that ushered in two years of panic and confusion. "If you see your net worth fall from $5 billion to $1 billion in a few months, it's easy to imagine your last $1 billion disappearing too," says Smith.