Silicon Valley Bank’s headquarters in Santa Clara, California. Photo: AFP / Noah Berger
Global ratings agency S&P says Asia-Pacific region banks have reasonable buffers to cope with contagion risks stemming from the collapse of the Silicon Valley Bank (SVB).
The agency said Asia-Pacific banking systems were in good shape to manage if SVB’s default became more troublesome or complex than envisioned, but pointed to New Zealand as a notable outlier among the region’s developed banking sectors.
S&P differentiated Asia-Pacific banking systems between jurisdictions from very low risk to very high risk.
“The significant majority are at the lower risk, whether it’s funding or liquidity,” S&P primary credit analyst Gavin Gunning said.
“New Zealand is the outlier since its economic risk trends are negative.
“New Zealand had a very hot property market for a while, and the Reserve Bank along with the Bank of Korea were two of the first Western developed banking systems to increase [interest] rates.”
He said contagion risks were more likely to take hold in the non-bank financial institution (NBFI) sector, more so than the bank sector.
“Even here we don’t believe Asia-Pacific NBFIs are particularly vulnerable to the spillover effects from SBV,” he said.
The Reserve Bank (RBNZ) has given a vote of confidence in the strength of New Zealand banks and their ability to cope with any financial crisis.
In a tweet the RBNZ said it had been monitoring overseas events that have struck three US banks, and Swiss giant Credit Suisse.
“We are confident that the banks we are responsible for supervising have sound liquidity and funding positions,” it said.
“In New Zealand all registered banks are required to have systems in place to monitor and control their material risks, and this includes interest rate risks.”
We are confident that the banks we are responsible for supervising have sound liquidity and funding positions. In New Zealand all registered banks are required to have systems in place to monitor and control their material risks, and this includes interest rate risks.
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S&P did not include any potential impacts of the Credit Suisse collapse in its risk assessment report for Asia-Pacific.
Shares in the New Zealand sharemarket took a hit when trading opened Monday morning, following the biggest global banking crisis since 2008.
The New Zealand market was the first in the world to open after a takeover deal backed by the Swiss government was announced for Credit Suisse.
The NZX Top 50 Index opened down half a percent, in line with steep falls in global markets late last week.
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The Swiss central bank said the deal marked a solution to secure financial stability and protect the Swiss economy in an exceptional situation.
Assurances from US President Joe Biden have achieved little to calm markets.
A New Zealand technology company with money trapped in collapsed Silicon Valley Bank says it is breathing easier at the news depositors will get all their money.
Silicon Valley Bank customers will have access to their deposits starting on Monday, US officials said, as the government announced actions to stem any broader financial fallout from collapse.
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