The high-profile collapse of the California-based Silicon Valley Bank (SVB) is unlikely to affect the Philippine economy, the Department of Finance (DOF).
Finance Secretary Benjamin Diokno told reporters on Wednesday that local banks have no reported connection to SVB, and its rapid downfall on Friday poses no threat to the Philippines.
“Philippine economy unaffected by SVP collapse,” Diokno told reporters when asked about the closed US-based lender that specialized in financing startups.
Diokno also pointed out that Philippine banking system is sound and well capitalized, adding that “There is no reported exposure of Philippine banks to Silicon Valley Bank.”
“I think the Fed [US Federal Reserve] and US finance authorities have successfully ring fenced the banking turmoil,” the finance chief said.
On Tuesday, the influential Bankers Association of the Philippines (BAP) gave assurance the banking public need not worry over recent developments in the US financial system one of whose banks has collapsed and taken over by authorities.
According to the BAP, the demise of the Silicon Valley Bank, America’s 16th largest lender, has no substantial or material impact on Philippine banks. I
Its failure has raised concerns over the financial strength of local lenders and their ability to respond to stresses such as those faced by the American lender before it finally relented.
“(Local) 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, banks in the Philippines continue to have capital and liquidity ratios that exceed the requirements set by the Bangko Sentral ng Pilipinas,” the BAP said in a statement.
“The prudential measures implemented by the Bangko Sentral ng Pilipinas (BSP) provide the necessary support that allows the Philippine banking system to withstand economic shocks,” it quickly added.
The group also said they continue to work with the BSP and other stakeholders pursuing “reforms that will lead to an even stronger financial system that sufficiently provides the financial needs of the banking public.”
The collapse of the American lender has led some to question the health of local lenders in terms of their balance sheet or underlying capital, for instance.
But according to BSP governor Felipe Medalla, the local banking system is strong, stable, resilient and responsive to the evolving needs of the growing economy.
“Our banking system sustained its solid footing as shown in the continued growth in its assets, deposits, and profits, as well as ample capital, liquidity buffers, and loan loss reserves,” Medalla said.
He also stressed the BSP’s commitment to champion financial inclusion and digitalization to build a technologically advanced, environmentally responsible, and financially inclusive economy.
