There was legitimate cause for concern in 1999. Rising activity in most countries did not translate into renewed corporate lending, since many industries continued to experience unutilised capacity.

Equally important, companies with weak financials and heavy debt burdens couldn't afford to take on more credit, while many banks - even liquid ones - were understandably squeamish about lending to any but the most creditworthy borrowers. Although restraints lessened for some banking systems in the latter half of the year, for the majority of Asian banks, just trying to cut their losses was the focus throughout 1999.

Historical correlations between loan growth and GDP in Asia seem to have been altered, a report from SG Securities suggested. Whether this is a short-term trend, or something that's here to stay, is still a subject of debate. It really wasn't until the last half of 1999 that loan demand began to recover at all, leaving figures for the year mostly negative, a far cry from pre-crisis double-digit growth levels. Though forecasts for 2000 are more sanguine, they are unlikely to look like those of 1996 at the end of the year.

"There is another source of pressure on banks, coming from the increasing sophistication of clients in the region," says Seck Wai Kwong, Head of Institutional Banking at DBS, noting that companies are increasingly able and willing to access capital markets for their funding needs.

The trend is logical, but let's not write off corporate banking just yet. Despite all the bad publicity about unresolved debt restructuring in parts of Asia, the simple fact is that most Asian companies still approach banks for the bulk of their financing needs, and will continue to do so, especially as business expansion resumes in the next few years. And since loan growth has historically lagged economic recoveries by two to three years, it's not surprising that commercial lending remains sluggish.

Far-sighted bankers are responding to the current challenges thoughtfully, with an eye to sustaining long-term relationships with their clients. For instance, instead of bemoaning borrowers' access to alternative sources of funds Asian banks are adapting from spread lending to earning fees from consulting and underwriting bond and stock issues as companies extend their reach to traditional capital markets products and add new ones like securitising their assets to reduce debt burdens.

And, of course, there are other avenues to explore. Enterprise banking represents another profit stream to fill the gap that institutional lending is incapable of at the moment. Often there's less competition among banks for this segment - and thus greater opportunity - to lend to small-and-medium-sized companies, which typically provide better margins because of more complex risk assessment skills. With stronger risk analysis coming into place across Asia, and an improving economic climate, enterprise banking looks set to boom.

While traditional lending to all types of companies remained slow last year, syndicated lending began to pick up in Asia. Although still below pre-crisis levels, the volume of such loans grew strongly in 1999. Securitisation also grew in popularity as a useful mechanism for raising capital for borrowers and producing higher yields on illiquid assets for investors, typically using real estate. Meanwhile, the better Asian banks also kept refining and improving their corporate e-commerce plans. Business-to-business e-commerce - which can enhance the entire business value chain, from orders to invoicing, payment, and shipment - is expected to multiply exponentially in the next few years with some estimating volumes reaching US$850 billion by 2002. Regional banks are building the infrastructure to offer these services to corporate clients in Asia, and will continue to share in the growth, while other financial institutions seem in jeopardy of missing the boat.