CHENNAI: Even though the successive failure of two private US banks, Silicon Valley Bank and Signature Bank, would cause a tightening of liquidity on the global debt markets, Moody's Investors Service on Tuesday predicted that the impact on the majority of rated financial institutions in India and the Asia Pacific (APAC) region would be minimal.
Moody's said the impact of the two US banks going down will be limited in India and other financial institutions in the APAC region due to structural factors. "Also, most APAC institutions are not exposed to the failed US banks, and only a handful of institutions has immaterial exposures. Finally, most institutions are not as susceptible to large losses from debt security holdings as Silicon Valley Bank was.
The second order impact of the US bank failures is still developing and bear close watching," it said. Moody's said the rated banks in the APAC region are mostly funded with customer deposits, while their market borrowings are modest at about 16 per cent their total assets on average. "Their business depositors are well diversified across different sectors, with no rated bank in the region being heavily exposed to technology companies.
Also, APAC banks' deposits are generally not heavily concentrated on single clients. Most banks in the region are subject to liquidity coverage ratio (LCR) requirements that are aimed at ensuring banks hold ample high-quality liquid assets to get through stressed funding conditions, such as deposit runs," Moody's said.
Signature Bank becomes next casualty of banking turmoil, Biggest default of the US!
