“The Bankers Association of the Philippines assures the Filipino public that recent developments
in the US financial system have no substantial or material impact on Philippine banks,” the organization said in a statement.
BAP explained that “banks have diversified deposit bases that include all sectors of the Philippine economy, allowing them to continuously provide the liquidity needs of their clients.”
Additionally, BAP said banks in the Philippines continue to have capital and liquidity ratios that exceed the requirements set by the Bangko Sentral ng Pilipinas (BSP).
“The prudential measures implemented by the BSP provide the necessary support that allows the Philippine banking system to withstand economic shocks,” the banking group said.
Moreover, the BAP said it continues to work with the BSP and other stakeholders to pursue reforms that will lead to an even stronger financial system that sufficiently provides the financial needs of the banking public.
Closures
US banking regulators closed Silicon Valley Bank on Friday, March 10, amid a run on the bank, which was the second-largest US bank failure behind the 2008 failure of Washington Mutual. They also announced Sunday, March 12, that New York-based Signature Bank was being seized after it became the third-largest bank failure in US history.
Following two bank failures, worries about financial stability and liquidity concerns were dominating the market landscape, said Stephen Innes, managing partner at SPI Asset Management in Hong Kong.
Depositors withdrew savings and investors broadly sold off bank shares Monday, March 13, as the federal government raced to reassure Americans that the banking system was secure after two bank failures fed fears that more financial institutions could fall.
US President Joe Biden insisted that the system was safe after the second- and third-largest bank failures in the nation’s history happened in the span of 48 hours. In response to the crisis, regulators guaranteed all deposits at the two banks and created a program that effectively threw a lifeline to other banks to shield them from a run on deposits.
“Your deposits will be there when you need them,” Biden told the public, seeking to project calm. He also said the banking executives responsible for the failures would be held accountable.
In other developments, the Federal Reserve announced that it would reassess its supervision of Silicon Valley Bank.
“We need to have humility and conduct a careful and thorough review of how we supervised and regulated this firm and what we should learn from this experience,” said Michael Barr, the Federal Reserve’s vice chair for supervision, who will lead the effort.
The US government agreed to cover deposits, for both cases even those that exceeded the federally insured limit of US$250,000.
Shares drop
Despite the message from the White House, investors broadly dumped shares in bank stocks. Shares of First Republic Bank closed down more than 60 percent even after the bank said it was taking emergency funding from the Federal Reserve and additional money from JPMorgan Chase.
Shares in KeyCorp and Comerica plunged by nearly a third. The stock of well-known franchises such as Charles Schwab, Fifth Third Bank, Truist and Huntington Bancshares all dropped by double digits.
Impact on Asia
In Asia, direct exposure to the risks from the US failures seemed slim, at least so far. Hirokazu Matsuno, the Japanese government spokesman, told reporters a major ripple effect to the Japanese financial system was unlikely. But fears sent regional benchmarks lower in morning trading.
Japan’s benchmark Nikkei 225 dropped 1.7 percent, extending losses from the day before. Australia’s S&P/ASX 200 dipped 2.1 percent and South Korea’s Kospi fell 0.9 percent. The Shanghai Composite index lost 0.7 percent, while Hong Kong’s Hang Seng was down one percent.
Amid the selloff of midsize banks, investors kept relatively calm over the health of the nation’s biggest banking bulwarks, such as Citigroup, Bank of America and Wells Fargo. Investors apparently concluded that the only place to be safe in banking was with the nation’s most strictly regulated institutions. (KOC with AP REPORTS)