By Rupa Damodaran
Published: 2009/05/28
MALAYSIA'S central bank chief has dismissed the possible downgrade of local banks by Moody's Investors Service, saying that it was wrong in its assessment during the Asian financial crisis.
Moody's may downgrade the credit ratings of Malaysian banks as part of a global review on the weakening ability of governments to support their banking system.But local banks have enough capital and are not under financial stress, said Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz.
"Even in the previous crisis, the amount of recapitalisation required was between RM6 billion and RM7 billion, one of the lowest percentage cost of the crisis and did not impair on the government."
During the 1997 financial crisis, she said Moody's was quick to cut Malaysia's rating by two notches on the grounds that it had a fragile banking system that needed "massive recapitalisation".
"They were proven to be so very wrong. In our assessment and stress test that we have conducted, all showed the high degree of resilience of our banking sector."