Malaysia financial institutions solid: central bank

Malaysia's central bank Tuesday said the country's financial institutions are solid, have "ample liquidity" and will be able to cope with the global financial turmoil.

"Several years of reforms... have significantly strengthened the banking system," the central bank said in a statement.

"The level of non-performing loans has also improved to 2.5 percent," it added.

The central bank said there was "ample liquidity in Malaysia's financial system" to facilitate the orderly functioning of economic and financing activities.

As at end-August 2008, net interbank placements with Bank Negara by the banking system amounted to 198.5 billion ringgit (79 billion dollars).

"The banking and insurance industries are therefore operating with adequate capital and liquidity buffers that have been accumulated over several years," it added.

The central bank said Malaysia's financial institutions have negligible exposure to both subprime-related securities and the affected financial institutions of other countries.

All foreign financial institutions in Malaysia are locally incorporated and have a high level of capital that is committed to support their domestic operations, it said.