S’pore banking system remains sound in wake of collapse of Silicon Valley Bank, Signature Bank in US: MAS

Police officers leaving Silicon Valley Bank’s headquarters in Santa Clara, California on March 10, 2023. PHOTO: AFP

SINGAPORE – The local banking system remains “sound and resilient”, the Monetary Authority of Singapore (MAS) said on Monday, amid the closure of two banks in the United States at the weekend.

The US authorities have since said that all customers of the two banks will be paid in full. 

In its statement, MAS said the Singapore dollar money market and foreign exchange market continue to function well.

SVB Financial Group, which did business as Silicon Valley Bank (SVB) and focused on start-ups, last Friday became the largest American bank to fail since the 2008 financial crisis.

This was followed by the closure of Signature Bank in New York state. It ran a big real estate lending business and had recently made bets on cryptocurrencies.

A third bank, California-based Silvergate Bank, which did business with a large number of crypto clients, announced earlier last week that it plans to wind down and voluntarily liquidate its operations.

In response to queries from The Straits Times, a DBS Bank spokesman noted that the bank has “strong liquidity and a diversified funding base that is supported by a solid retail customer deposit franchise”.

Its loan exposure to start-ups is immaterial, and it does not have exposure to the three banks.

DBS said its loan books have benefited from rising interest rates while its debt securities, or fixed-income securities portfolios, have relatively short maturities.

Short-term bonds are less sensitive to interest rate changes than long-term bonds, meaning that if interest rates rise, the value of the short-term bonds in the portfolio is less likely to decline significantly compared with longer-term ones.

A UOB spokesman noted that the bank has a sizeable and diversified deposits base, and added that it has a short-duration and highly liquid securities portfolio. It, too, has no exposure to the three banks.

Ms Koh Ching Ching, head of group brand and communications at OCBC Bank, also confirmed that her bank does not have any exposure to the three banks.

In its statement, MAS reiterated that “banks in Singapore are well capitalised and conduct regular stress tests against interest rate and other risks”.

Thus “their liquidity positions are healthy, underpinned by a stable and diversified funding base. These factors will allow them to weather potential stresses from global financial developments”.

The central bank added that it “stands ready to provide liquidity through its suite of facilities to ensure that Singapore’s financial system remains stable and financial markets continue to function in an orderly manner”.

MAS will also work with Enterprise Singapore to assess any potential impact the failure of SVB and Signature Bank might have on Singapore start-ups, including those with operations in the US.

This comes after the US Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation on Sunday said depositors at Signature Bank will have access to their money – just like SVB clients, who will get their money in full on Monday.

“All depositors of this institution will be made whole,” the regulators said. “As with the resolution of SVB, no losses will be borne by the taxpayer.”

MAS will also work with Enterprise Singapore to assess any potential impact the failure of SVB and Signature Bank might have on Singapore start-ups. PHOTO: REUTERS

MAS said the feedback it has received so far indicates that any impact is limited.

ST understands that Singapore-based, US-listed Grab is not exposed to SVB. Mr Nirgunan Tiruchelvam, head of consumer and Internet at investment advisory firm Aletheia Capital, confirmed that Grab has not banked with SVB.

Meanwhile, payments firm Wise, which has a Singapore-client base, told Reuters that while it held funds in SVB, the firm faced “minimal exposure”.

Singapore’s investment company Temasek said it does not have any direct exposure to SVB. Some companies in its portfolio, including US-listed payments firm Bill.com and online gaming platform Roblox, have also filed statements noting that their exposure to the bank is limited. 

GIC declined to comment. ST understands that the Singapore sovereign wealth fund has limited exposure to SVB and does not have any accounts with it.

A Singaporean start-up founder based in the US, who did not wish to be named, told ST it managed to move 90 per cent of its money out of SVB on Thursday morning, just a day before the bank collapsed.

“The past few days have been crazy, I spent the whole weekend opening up over 10 bank accounts around the world. This episode shows us the importance of diversifying where we put our funds.”

  • Additional reporting by Clara Chong and Cheryl Tan

Correction note: This story has been updated to reflect Temasek’s statement that it does not have any direct exposure to Silicon Valley Bank.

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