Apac banks resilient to US bank failures – Fitch

Banks in Asia Pacific should be largely resilient to the risks raised by a series of bank failures in the US, according to credit rating agency Fitch. The collapse of Silicon Valley Bank (SVB) and Signature Bank, plus the plummeting share price of First Republic Bank, has led to fears of contagion within the global banking system. But, according to Fitch, direct exposure to those banks is “limited” across the Apac banking sector. Not only are the factors that led to the collapse of these banks factored into Fitch’s credit ratings, but they are also offset by structural factors such as regulation and the provision of liquidity support from central banks, according to Fitch. In addition, few Fitch-rated banks in the region “have the sort of depositor concentration profiles that left SVB vulnerable to a run”, stated the agency. Fitch does highlight the relative vulnerability of Asia’s digital banks to depositor volatility but also adds that the two digital banks it rates should be able to rely on support from their parent banks if needed. The rating agency also adds that securities portfolio valuation risks should be “manageable” for Apac banks. ©2023 funds global asia


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