A sign for financial agency Fitch Ratings on a building at the Canary Wharf business and shopping district in London, UK, on Thursday, March 1, 2012.
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“Risk-tolerant” Asia-Pacific banks highlighted by failures in the US banking sector, Fitch Rating says Fifth, adding exposure to Silicon Valley Bank and Signature Bank is trivial for the regional banks the agency is in charge of.
“The direct risks among banks rated in APAC by Fitch in APAC for SVB and Signature, which we know of, are not important to credit profiles,” Fitch said in a note.
“Weaknesses that contributed to the failure of the two banks were among the factors considered in our rating assessment of APAC banks, but these weaknesses are often cited,” Fitch said. compensated by structural factors”. India and Japan.
Fitch’s assessment of banks in Asia-Pacific is given as US Treasury Secretary Yellen overnight said Not all uninsured deposits will be protected in the event of a future bank failure.
Overall, we consider equity portfolio valuation risk to be manageable for APAC banks.
‘Sovereign support’
While Fitch sees the risk of significant volatility in digital banks’ deposits across the region, Fitch notes that governments in Asia Pacific may step in to support banks. their customers when needed – an ability that will further reduce risk.
“We believe the risk from valuation loss will be offset by the ability of the government to provide liquidity support to banks if needed,” the agency said, noting that regulatory agencies in Australia and Japan as examples.
Officials in the region “emphasize robust interest rate risk management”, including in Australia, which applies a minimum requirement for non-commercial interest rate risk, the analysts added. Bank of Japan has reduced stock investment and term.
“Finally, the creditworthiness of many Fitch-rated banks in APAC is heavily influenced by the prospect of special government support,” the note said.
“We generally consider equity portfolio valuation risk to be manageable for APAC banks,” said Fitch.
The Fed’s Next Steps
Fitch said that even if Federal Reserve has made earlier-than-expected changes to its monetary policy, such as cutting its base rate rather than the expected rate hike, banks in the region will still not see much of an impact. motion.
The agency stressed that Fitch does not see the latest developments leading to major changes in US monetary policy.
“If they lead to lower US top rates or a US rate cut sooner than we expect, this could leave monetary policy looser in some APAC markets than we expect.” our baseline,” it said.
“Overall, we believe this will be a negative credit to APAC banks, as the effect on net interest income will outweigh the effect on stock valuations, but it will support the quality of assets and we do not expect meaningful effects on bank ratings.”
