Singapore 'likely to be hit' if US defaults
By Aaron Low, Economics Correspondent
SINGAPORE is likely to be among the worst-hit countries in Asia should the United States default on its massive debts leading to a financial crisis, warned Credit Suisse yesterday.
This is because US banks account for almost 15 per cent of total domestic bank lending here, said the bank in a report.
In such a default cum credit crunch scenario, American banks would almost certainly withdraw their funds from the region, including Singapore, said Credit Suisse head of India and South-east Asia economics Robert Prior-Wandesforde.
'Should the US default and a credit crunch happen, it would make the fall of Lehman look like a picnic,' he added, referring to the collapse of Lehman Brothers investment bank in September 2008, an event that triggered the financial crisis.
US lawmakers have been locked in heated, partisan talks over raising a statutory limit on the US borrowings ceiling ahead of an Aug2 deadline.
If the US fails to raise this debt ceiling, it could default on its obligations - sending shock waves across global financial markets, said analysts.