Standard & Poor's Ratings Services said Thursday that the recent outbreak of atypical pneumonia in greater China and southeast Asia is unlikely to have any immediate impact on its ratings on banks and insurance companies in the region.
The atypical pneumonia is likely to pressure the immediate financial performance of banks in the region's worst-affected economies, particularly Hong Kong, by subduing business and increasing the defaults, Standard & Poor said in a press release.
However, it said, it is unlikely to seriously affect their medium term financial profiles, assuming that the atypical pneumonia outbreak will not escalate into a pandemic.
Business in the travel, tourism, hospitality, and the retail industries, small and medium-sized enterprise, are facing reduced sales and this reduction is squeezing cash flows with negative follow-on consequences for banks' loan performance, it said.
In the insurance industry, possible travel and medical insurance claims generated by atypical pneumonia are likely to be limited, while business interruption risk caused by the illness is not likely to be covered by most existing policies, according to Standard & Poor's.
(Xinhua News Agency April 11, 2003)
