Currently, European banks find themselves working harder than Asian banks on improving their liquidity management. In Europe, the scarcity of wholesale funding has created a dependence for banks on cheap funding supplied by the European Central Bank. By contrast, most Asian banks largely avoided the staggering effects of the global financial crisis and currently benefit from an abundance of retail deposits.
Nothwithstanding, Asian banks are not entirely free from the pressures felt by their European counterparts. Not only must they occasionally source funds from the increasingly volatile global wholesale markets, but they must also contend with an economic outlook that points to a slowdown in retail deposit growth in the region. In our Point of View, Liquidity Risk Management in Asia, we examine the three key elements that Asian banks should focus on for liquidity risk management: Funds Transfer Pricing (FTP), War-Gaming and Cross-Border Funding.
