Standard & Poor's has warned that losses in Asia could ultimately represent 7 to 9 per cent of equity of the 20 European banks with the highest exposure in the region.
But the credit rating agency said they were expected to survive despite considerable debt exposure.
In its latest CreditWeek report, Standard & Poor's said European banks were generally expected to comfortably absorb potential losses and maintain present credit ratings.
'Wide business diversification and an improved banking market at home will help European banks absorb the hits that will surely come from the Asian debt crisis,' said the agency's Paris-based Financial Institutions Ratings Group managing director Scott Bugie.
On average, he said losses could amount to 30 to 40 per cent of one year's pre-provision earnings and 55 per cent to 75 per cent of average annual pre-tax earnings for that group of 20 banks.
The report compared European banking systems with the highest exposures in Asia - including the French, Dutch, German, British and Swiss - and the potential impact on credit profiles of individual banks.