BRIC banks 'set to struggle in near future'

25 July 2012

Banks based in the world's biggest emerging economic powers could experience a tougher operating environment in the near future, a new report has indicated.

Research published today (25 July) by Standard & Poor's (S&P) has predicted that the BRIC (Brazil, Russia, India and China) group may see their fiscal growth decelerate over the next 12 to 24 months.

Therefore, the leading credit rating agency noted financiers in these four countries may witness a weakening in their earnings and asset quality due to the knock-on impact of this trend.

At present, S&P has a stable ratings outlook for major banks in Brazil, Russia and China and has placed India on negative watch due to the state's sovereign financial issues.

However, Geeta Chugh, credit analyst at S&P, indicated that lenders in the BRIC group will not suffer too much due to the fact many companies are state-owned.

"Such a link is integral to the economic model of these countries. We expect governments to step in to avoid any abrupt and unexpected deterioration in local banks' financial condition," the official added.

By Tony Aynsley

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