KUALA LUMPUR - There is an apparent Western bias in credit rating agencies' assessment of economies and their risk profiles, said CIMB Group Holdings Bhd chief executive officer Datuk Seri Nazir Razak.
"If you look at the global financial system today, it was constructed and dominated by the West. If you look at the rating system for example, it is all dominated by S&P (Standard & Poor's) and Moody's (Investors Service)," Nazir said at the Global Malaysia Series forum yesterday.
He said the rating agencies "dictate'" how countries and banks looked at each other, pointing out that this determined how much capital a bank had to put against a loan it gave to a certain company.
"My question is, why are we (only) dependent on S&P and Moody's? Are they able to assess our credit (worthiness) properly?
"If you look at their history, it is pretty bad because for the longest time they said Spain had a much better credit (rating) than China - when China was doing all the lending while Spain was doing all the borrowing," Nazir said.
"This doesn't make sense and this is a clear example of the Western bias in the system. And until today we still have not evolved an Asian rating agency. I think that Ratings Agency Malaysia (RAM) should evolve to Ratings Agency Asia (RAA)," he quipped.
Despite the present situation, Nazir also noted that there was a "discernible rise" of Asian players and this could be the wider trend over the next few years.
"You will see a strenghtening of Asian players, particularly. The Japanese and the Chinese are moving once again and of course the ASEAN banks are moving (up)," Nazir said.
He also noted that this observation did not mean he was "anti-West" but rather his matter-of-fact observation as a banker working in the system.
Meanwhile, Nazir said CIMB was still on the lookout for expansion opportunities in the Philippines even after the aborted deal to buy a majority stake in Bank of Commerce from San Miguel.
"Some deals close while some don't. In this case we could not agree on the final terms of the transaction. We are committed to going to the Philippines as it is a key market in ASEAN and integral to what we're doing," he said.
On CIMB's Thai operations, Nazir said it was still facing challenges in fixing certain segments of its operations there.
"For us to buy a controlling stake in Thailand we had to buy a dysfunctional bank - this was the rule.
"We have done very well on the wholesale side but it still needed time to fix the retail (banking) side because its operations were in a very weak state, so there is a lot of systems work to be done," he said.