IT COMES as almost no surprise that regional markets fail to get any booster from Wall Street's late rebound last Friday.
Citigroup's crisis of confidence casts a long shadow over the region, given the huge banking franchise it operates in Asia, as it experienced a 60 per cent of the value of its depressed shares last week.
Regional banks such as HSBC, Standard Chartered Bank and DBS Group Holdings are among the losers today, falling between 2 and 3 per cent each, as jitters grip investors ahead of much awaited moves by US regulators to stabilise the embattled banking giant.
Given the global reach of Citigroup, I am surprised that the US has not not started passing the hat around to ask other governments to participate in steadying the bank.
Unlike British banks like Lloyds, HBOS or even Royal Bank of Scotland which are still rooted primarily in the UK, Citigroup has a truly global reach with operations in over 100 countries.
Any fallout it encounters from its problems will be immense.
It may produce deflationary pressure for small vulnerable economies on a scale we have not seen since the Great Depression in the 1930s.
Demand across the board for everything from homes to motor cars will nose-dive, as consumers and businesses will face a big tightening in credit. Costs of funds may be dirt cheap as interest rates tumble to record low levels, but it will be almost impossible to get loans as the conduits for lending - banks - become choked with fear.
As a harbinger of things to come, just take a look at the premiums for certificates of entitlement. It fell to $2 last week, as demand for small cars fell on the economic downturn concerns. Let's not also forget that Citibank is one of the biggest financiers for motor car loans in town.
Because Citigroup is so huge and inter-connected, we should not be watching the unfolding drama at the bank with only detached interest. Citigroup's woes is no longer a purely US problem.
While some will, no doubt, recall United Overseas Bank chairman Wee Cho Yaw's warning more than 20 years ago against granting foreign banks wider access to the domestic banks, this is no time for regrets.
Any internationally-co-ordinated effort to stabilise Citigroup will also serve as a blue-print on how to deal with other troubled global financial institutions. One example that comes to mind immediately is AIG whose unit AIA is a dominant player in Asia.
As for the bank whose proud motto is that it never sleeps, it may finally get some fitful rest, as the problems which it had been battling since last August are resolved finally.
Read: Citi to get US$20 billion government aid.