Asian banks less exposed to subprime mkt: Moody's

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Deborah Schuler , Senior Vice President and Regional Credit Officer at Moody's says that, in their extensive survey of banks in Asia, they found Asian banks to be considerably less exposed than those elsewhere in the world.

She added that they had not downgraded any banks in the region including Indian banks.

According to her, the subprime problem itself was finite. However, she added that there was quite a bit of liquidity crunch being caused, and opening up of credit spreads globally, because of banks and CDO s' exposure to the subprime market.

Excerpts from CNBC-TV18's exclusive interview with Deborah Schuler:

Q: You have completed your assessment of the banks in the region. Do you believe that there is a significant amount of exposure to the subprime mortgage market and that could play out in the future?

A: We have done an extensive survey of banks in Asia and we found the Asian banks to be considerably less exposed than those elsewhere in the world. As a result, we have not downgraded any banks and we don't expect to.

Q: What about India, have you surveyed the banks in this region?

A: Yes, we have surveyed India as well and come to a similar conclusion that the exposures are in the larger more international banks but even there they are small enough that they are not a ratings issue.

Q: The fall that we saw in the markets across the globe was primarily on account of BNP Paribas' assets being frozen with three funds. Central banks across the globe have injected a lot of liquidity overnight. How are you reading into that move at this point and more importantly would you say that the subprime mortgage problem in Europe not as big as it has been blown or projected to be?

A: The subprime problem itself is finite. However, what we are seeing is the concern about mortgage-backed securities, banks' exposure to those securities and collateralised debt obligations, CDOs that also have exposure to the subprime market and other higher risk loans. This is causing quite a bit of liquidity crunch and has opened up the credit spreads globally. It doesn't change the real issue, which is how much loss there is in the underlying securities. But the kind of panic over exactly where that risk has found a home, is causing additional problems and that is what we have been seeing this week.