Walter Y. Yao

Director, Risk, Policy and Analysis Group

Walter Yao is a Director in the Financial Institution Supervision and Credit (FISC) Group at the Federal Reserve Bank of San Francisco, overseeing the Country Analysis Unit (CAU). The CAU is responsible for research on Asian financial sectors and the supervisory analyses of Asian foreign banking organizations that operate in the United States. In addition, the CAU manages FISC’s Asia Program, which conducts activities designed to share information on issues and developments in Asian financial sectors with the banking and regulatory communities. As part of this work, the CAU publishes the Asia Focus periodical, maintains the Pacific Exchange Blog and podcasts, and holds regular conferences, symposia, and forums to address

During his career, Mr. Yao has managed other functions within FISC, including the Surveillance and Data Analytics Units and the Foreign Bank Supervision team, which is responsible for the direct supervision of the U.S. operations of foreign banking organizations in the 12th District. He has also served as FISC’s primary accounting specialist and has co-chaired a Federal Reserve System Committee on accounting issues. During his tenure at the Reserve Bank, Mr. Yao has been an advisor to the International Monetary Fund (IMF) under its technical assistance programs with various Asian central banks. In particular, he participated in the IMF’s Financial Sector Assessment Program for the People’s Republic of China in 2010.

Mr. Yao received a Bachelor of Science in Business Administration from the University of California, Berkeley, and a Master of Science in Industrial Administration from Carnegie Mellon University. He also holds the professional designations of Chartered Financial Analyst, Certified Management Accountant, and Certified Public Accountant. Mr. Yao currently serves on the board of directors of the University of Washington’s Global Bankers Program (formerly Pacific Rim Bankers Program).

Pacific Exchange Blog Entries

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China Tightens Bad Loan Recognition Rules

Posted September 13, 2018

China’s recent decision to tighten bad loan recognition standards is an important and necessary step to repair small lenders’ balance sheets. The decision also means there will likely be significant recapitalization needs among lenders down the road, in addition to expectations for slower bank loan growth.

Asian Banks Search for Yield Overseas

Posted February 22, 2018

Asian bank profitability has been squeezed in recent years, driven to some extent by intense competition among the large number of banks in the region. To boost profitability, banks from some developed Asian economies have expanded operations into Southeast Asia by setting up branches and investing in local institutions. What began as a search for yield is likely to persist because banks’ strategies to increase profits align with their governments’ initiatives in the region.

Chinese Banks are Writing Off More Loans and That is a Good Thing

Posted December 6, 2016

In recent years, Chinese banks have become more aggressive in writing off their nonperforming loans as a way to address their asset quality issues. The acceleration in loan write-offs by Chinese banks was made possible by the relaxation of tax rules and is a step in the right direction for banking reform.

Why Asian Banks are Well Positioned for Basel III

Posted November 23, 2016

A San Francisco Fed review indicates the Asia-Pacific’s 75 major banks are well positioned to meet Basel III minimum standards for implementation in 2019. The strong position of Asian banks can be attributed to the build-up of capital and liquidity buffers after the Asian Financial Crisis of 1997-8, as well as less reliance on leverage and hybrid capital instruments than their western counterparts. The end result is both higher levels and quality of capital.

Implementation of New Impairment Standards: IFRS 9’s Impact on Asia

Posted August 11, 2016

Many Asian economies will soon implement IFRS 9. The new standard will fundamentally change how banks determine loan loss allowances. This significant change in methodology will likely require that many banks increase loan loss provisions, resulting in lower reported earnings.

Not All NPLs Are Created Equal

Posted December 18, 2015

Credit quality is a key aspect of an institution’s overall soundness. Arguably the most widely used measure for gauging the quality of an institution’s loan portfolio is the reported nonperforming loan (NPL) ratio. However, not all countries use the same definition and therefore NPL ratios are not necessarily comparable across borders.

Welcome to Pacific Exchange

Posted June 19, 2015

We are pleased to announce the launch of Pacific Exchange, a new blog from the Federal Reserve Bank of San Francisco focused on financial and banking developments in Asia. Written by the analysts of our Country Analysis Unit, Pacific Exchange will provide timely analysis on the most important trends in the Asia Pacific in a format accessible to a broad audience.

Asia Focus Publications

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Accounting Regulatory Architecture in Asia

Posted April 1, 2012

Accounting regulatory regimes play a critical role in ensuring the reliability of financial data and the credibility of a company, and ultimately in supporting the stability of an economy. Prompted in part by the U.S. actions taken pursuant to the Sarbanes-Oxley Act, many Asian economies have established similar regulatory bodies and standards for their domestic accounting industry.