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Monday, July 15, 2024

Singapore, Japan and Hong Kong banks downplay SVB crash

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Banks in Singapore, Japan and Hong Kong have sought to reassure their customers and investors that they are not affected by the collapse of Silicon Valley Bank (SVB), the second-largest bank failure in U.S. history.

SVB, which served many technology companies and venture capitalists, failed on March 10 after a bank run triggered by its announcement that it needed to raise $2.25 billion to shore up its balance sheet. The bank had suffered losses from its investments in long-term Treasury bonds, which lost value as interest rates rose sharply.

The Federal Deposit Insurance Corporation (FDIC) took over SVB and reopened it as a bridge bank on March 13, promising to make all depositors whole from the proceeds of selling the bank’s assets.

However, the failure of SVB has raised concerns about the stability of other banks that have exposure to the technology sector or similar bond portfolios.

In Singapore, DBS Bank said that it had no direct exposure to SVB and that its bond portfolio was well diversified and hedged against interest rate risk. The bank also said that it had ample liquidity and capital buffers to withstand any market volatility.

In Japan, Mizuho Bank said that it had only a small amount of loans to SVB clients and that it was monitoring their credit quality closely. The bank also said that it had reduced its holdings of long-term Treasury bonds since last year and that it had sufficient liquidity and capital ratios.

In Hong Kong, HSBC said that it had no material exposure to SVB or its clients and that its bond portfolio was mostly short-term and high-quality. The bank also said that it had strong liquidity and capital positions and that it was confident in its ability to serve its customers.

All three banks stressed that they were committed to supporting the technology sector and innovation in their respective markets. They also urged their customers not to panic or withdraw funds unnecessarily.

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