Most financial institutions in the Asia-Pacific region have no exposure to failed US banks and are not at risk of debt securities holdings like Silicon Valley banks.
Moody’s Investors Service said these things on Tuesday. It is noteworthy that the US regulators decided to shut down Signature Bank on 12 March. Just two days before this, it was decided to close the Silicon Valley Bank.
These banks were in trouble due to massive withdrawal of their deposits by customers. Moody’s said that these developments have made investors cautious, in which case there could be a liquidity crisis in the bond markets around the world.
However, its impact on financial institutions in Asia-Pacific is going to be limited due to structural factors. “Most of the institutions in the Asia-Pacific region have nothing to do with failed US banks, with a small number of institutions having little to do with them,” it said in a statement. Ultimately, most institutions are not at risk of losses from debt securities holdings as large as those of Silicon Valley Bank.
Moody’s said Asia-Pacific banks included in its ratings have structurally stable funds and adequate liquidity. Their depositors are from diverse regions and none of the banks in the region have much exposure to technology companies.
In addition, the deposits of banks in this region usually do not have large deposits of any single customer. It said that while most banks in the region are funded by customer deposits, their market borrowings also average around 16 per cent of their total assets, which is not very high.
