Fitch Ratings notes in a just published report, "Bank-Support and Fiscal Measures Being Implemented in Asia-Pacific", that such measures vary widely, depending on the perceived need for support given the funding and balance sheet strength of each country's banks and the exposure of their economies to the global downturn. In this regard, Korea, Australia, Japan and China have so far been the most active.

The report discusses and compares the main bank-support measures introduced by the respective authorities, differentiating between direct capital support, removal of and guarantees for bad assets, and direct liquidity support and guarantees for banks' existing and/or newly issued obligations. The agency also discusses the fiscal and monetary policies of the main Asia-Pacific economies and compares how aggressive the governments are planning to be in supporting the broader economy.

As in the US and Europe, governments in the Asia-Pacific region have introduced a variety of measures since mid-2008 to support their respective banking systems and - even more importantly in some cases - limit the slowing of their economies. The most common support instrument to date has been state guarantees for banks' obligations, including deposits and borrowings. Blanket deposit guarantees have been introduced in Australia, Hong Kong, Malaysia, New Zealand, Singapore and Taiwan. Meanwhile, Australia, New Zealand and South Korea stand out in offering to guarantee banks' debt obligations. In addition, there have been numerous cases of central bank liquidity support for systems in general.

With most Asian banks not suffering from substantial losses due to asset revaluations related to the financial crisis, capital injections have so far not been necessary. South Korea, Japan, India and Hong Kong, however, are setting up capital funds for their banks to tap - not so much because the banks clearly need such capital at this stage, but rather to ensure confidence in their banks and also to ensure that their banks are in a good position to continue lending. Similarly, governments have, only in very limited cases, removed problematic assets from banks' balance sheets, with only South Korea guaranteeing loans to SMEs that are struggling to meet their liquidity needs. Fitch considers it possible that some countries will introduce additional measures to ensure their banking systems remain stable and do not face a competitive disadvantage when compared with other systems.

With Asia-Pacific's economies slowing - despite this being somewhat offset by government fiscal packages - credit costs are bound to rise, putting bank ratings under pressure. At the same time, direct government assistance to the banks will ultimately support many of their ratings. The extent to which governments can provide fiscal packages and directly assist banks, however, is limited, and Fitch notes the risk that over the longer term, government finances and economic systems could be strained by an excessively unwise use of banks to support non-viable borrowers.