The CEO of Southeast Asia’s largest lender DBS expects dollar funding shortages to continue into 2012 but he said Asian banks were well equipped to deal with the situation.
Piyush Gupta who was attending the CEO Power Session at the Asia Business Leaders Awards in Singapore told CNBC that while there were a lot of dollars available with banks and corporates in the U.S. it was not making its way to Asia.
While he feels the Asian banks have ample local currency liquidity, a large part of trade finance is dollar driven and that is getting tight.
Gupta also said banks in Asia were able to benefit from Europe's crisis as European banks faced funding pressures.
"MNCs (are) looking to diversity their banking partners …they don’t want to put all their eggs in one basket…they are looking at regional banks now preferably in Asia,” he said.
In the future though, Gupta said it would be harder for Asian banks to benefit from this trend. “As funding capacities start to dry up your ability to take market share is constrained.”
Singapore-based DBS, however, has plenty of liquidity, according to Gupta, with $60 billion (S$80 billion) in savings deposits. The bank though will have to see how much of that they need to deploy to “fund their dollar books,” he said.
The CEO also said the bank was open to buying assets from European banks, looking to shed assets.
“We are open to buying portfolios but they must be aligned to our strategic agenda, which is building an Asian franchise….so if a French bank wants to sell its Asian wealth management assets sure we would be interested,” said Gupta. “Unfortunately most of the European banks’ assets are Europe-centric.. and that is of less interest to us.”
Watch CNBC's Asia Business Leaders Awards on TV and via live streaming on CNBC.com on Thursday, November 24th at 8 p.m. Singapore/HK time.