An analysis by S&P Global Ratings found that banks in Latin America are indirectly exposed to the failures of Silicon Valley Bank and Signature Bank as this will increase risk aversion among institutional investors.
“The region’s major banks benefit from a stable deposit base and strong franchises that should reduce deposit volatility, but smaller, more concentrated financial institutions and fintechs may suffer from the flight to quality,” the rating agency said.
However, he clarified that the bankruptcy of US banks has no immediate impact on the ratings of banks in Latin America.
He added that the indirect effects are represented by a growing aversion to risk among institutional investors, which would lead to higher funding costs and a shortage of funding for financial institutions in the region.
“These trends were already present in the Latin American banking sectors, but the recent banking problems in the United States will reinforce them,” he said.
For its part, Moody’s assured that Latin American banks “have limited direct exposure” to Silicon Valley Bank (SVB), which has filed for bankruptcy, and to Silvergate Bank and Signature Bank (SNY), which have been shutting down, “as well as to ‘fintechs ‘ and crypto asset companies, both through deposits and loans”.
In this sense, the analysis indicates that only Brazil’s Bradesco and Chile’s Banco de Crédito e Inversiones (BCI) have subsidiaries in the United States, but that the risks associated with these banks are “relatively limited” given the size of their operations and the market. they aim. .
“Most banking systems in Latin America are concentrated in large, solid and highly diversified banks. As a result, segment concentration to a single sector is relatively limited, helping to protect the region’s banking systems,” he says. Investors Service Director Marianna Waltz.
Moody’s adds that Latin American banks “hold large amounts of liquid assets largely consisting of investments in national government securities” and most are not focused on a single industry, such as technology companies.
Source: El heraldo
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
