As events of the past year have shown, transparent and timely information is crucial in the financial markets. Lack of information can be a killer, or at the least a severe embarrassment. But ironically those very institutions that have been pushing most for greater transparency in emerging markets, the major US banks, are themselves guilty of hiding their own exposures from their shareholders.
They are not breaking any laws, of course. Each institution complies with the reporting requirements for shareholders as laid down by the Securities & Exchange Commission. That, one would think, ought to provide investors with more than enough information. Not according to Raphael Soifer, banking analyst at Brown Brothers Harriman on Wall Street.
According to his latest country risk survey last month, the six money-centre banks - BankAmerica, Bankers Trust, Chase Manhattan, Citicorp, First Chicago and JP Morgan - report barely half of their emerging-market exposure to the SEC in their 10-K and 10-Q reports. As a benchmark he uses the figures filed by the banks with the Federal Financial Institutions Examination Council (FFIEC).
Having tracked US banks since the 1980s, through the debt crises, into the 1990s, he has seen the banks repeat the same kinds of tricks in the last few years.