SVB fallout: PH bank shares tumble
SANTA CLARA, CALIFORNIA – MARCH 10: The Silicon Valley Bank (SVB) logo is seen through a rain covered window in front of the SVB headquarters on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation. Prior to being shut down by regulators, shares of SVB were halted Friday morning after falling more than 60% in premarket trading following a 60% declined on Thursday when the bank sold off a portfolio of US Treasuries and $1.75 billion in shares to cover declining customer deposits. Justin Sullivan/Getty Images/AFP (Photo by JUSTIN SULLIVAN / GETTY IMAGES NORTH AMERICA / Getty Images via AFP)
MANILA – Philippine banking stocks came under pressure on Monday after negative sentiments from the closure of US-based Silicon Valley Bank (SVB) spilled over into the local market on Monday.
This was despite the country’s biggest lenders having no exposure to SVB, whose collapse over a period of 48 hours was touted as the second-biggest bank failure in the United States, sparking more widespread financial contagion concerns.
In an effort to shore up confidence, US regulators said depositors of SVB and another failed lender, Signature Bank, will be fully paid and will have access to their money on Monday.
The Philippine Stock Exchange (PSE) financial subsector was the biggest loser on Monday as it slipped 2.04 percent. The selldown of large domestic banks helped pull down the benchmark PSE index by 0.69 percent to 6,544.45.
The industry group Bankers Association of the Philippines declined to comment on Monday.
Article continues after this advertisementIn response to a query from the Inquirer, Ty-led Metropolitan Bank and Trust Co. (Metrobank), the country’s second-largest bank, said it has no exposure to SVB.
Article continues after this advertisementBank of the Philippine Islands (BPI), the country’s third-largest bank, also said it has no exposure in SVB.
“Given the prudence by which we manage our resources, BPI’s liquidity and capital ratios remain well above regulatory thresholds,” said BPI, which is part of the country’s oldest conglomerate, Ayala Corp.
Poor sentiments
The Inquirer also learned the SM Group’s BDO Unibank Inc., the country’s largest lender, has no exposure to SVB.
Union Bank of the Philippines (UBP) CEO Edwin Bautista said they also have no exposure to the failed bank.
Jonathan Ravelas, managing director at eManagement for Business and Marketing Services, said the stock market was weighed down by “poor sentiments after SVB’s failure.”
“All eyes will be on the US Federal Reserve if they will dial back on interest rate hikes,” Ravelas said.
Heavily traded banking stocks included BDO Unibank, which slipped 1.77 percent to P122 per share, and BPI, which shed 3.58 percent to P105.10 per share.
Eugene Tarzimanov, vice president at credit watcher Moody’s Investors Service, said Asia’s banking sector was well insulated from the fallout of SVB.
“What we particularly like about Asian banks and what gives them resilience is strong capital, good quality of loan books and good funding and liquidity,” Tarzimanov told CNBC on Monday.
“What we particularly like is that most of their assets are financed by deposits and most importantly deposits are widely diversified by various business, retail, corporate and [small and medium-sized enterprises]”, he added. INQ
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