17th March 2023 – (Hong Kong) Fitch, the prominent ratings agency, issued a statement on Thursday indicating that direct exposures to Silicon Valley Bank and Signature Bank are minimal in their portfolio of rated banks in the Asia-Pacific (APAC) region.
However, Fitch was quick to note that weaknesses leading to the failure of the aforementioned banks have been factored into the agency’s rating assessments for APAC banks.
In addition, Fitch expressed confidence in the ability of APAC banks to manage securities portfolio valuation risks, with exposures being most pronounced in India and Japan.
The collapse of Silicon Valley Bank has caused a crisis of confidence in the banking sector, triggering deposit runs at numerous regional banks. Despite emergency measures introduced by U.S. authorities to restore confidence, the fallout has been significant.
On the same day, S&P issued a statement indicating that the consequences of the Silicon Valley Bank’s collapse may not necessarily result in any rating actions on APAC banks. The statement further highlights the strength of APAC banks in absorbing possible contagion effects.