Japan, Singapore, Hong Kong downplay impact of Credit Suisse woes

Asian financial authorities say Swiss lender’s takeover not likely to affect stability of local banks.

Financial authorities in Asia have moved to downplay the local fallout of the turmoil at Credit Suisse, saying they do not expect the takeover of the troubled Swiss bank to affect the stability of local lenders.

The Monetary Authority of Singapore (MAS) said on Monday that Credit Suisse would operate as normal in the city-state, with customers having full access to other accounts, following the lender’s purchase by UBS Group over the weekend.

“The takeover is not expected to have an impact on the stability of Singapore’s banking system,” MAS said in a statement.

“MAS will continue to closely monitor the domestic financial system and international developments, and 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,” the city-state central bank said.

Hong Kong’s Monetary Authority (HKMA) and the city’s Securities and Futures Commission said that Credit Suisse is open for business as usual and the bank’s local assets of 100 billion Hong Kong dollars ($12.7bn) represent less than 0.5 percent of the total in the Chinese territory’s banking sector.

“The exposures of the local banking sector to Credit Suisse are insignificant,” HKMA said in a statement. “The Hong Kong banking sector is resilient with strong capital and liquidity positions. The total capital adequacy ratio of locally incorporated authorised institutions stood at 20.1 percent at the end of 2022, well above the international minimum requirement of 8 percent.”

In Japan, Chief Cabinet Secretary Hirokazu Matsuno welcomed moves by regulators to shore up confidence and said he did not expect the turmoil at lenders in Europe and the United States to spread to local banks.

“Japan’s financial system is stable as a whole,” Matsuno said.

The announcements came as markets in Asia slid in early morning trading on Monday amid persistent jitters over the health of the global financial system, with key indexes down in Japan, South Korea, Hong Kong and Australia. China’s blue-chip CSI300 and Shanghai Composite Index made gains, as fresh monetary-easing measures by Beijing helped to offset the concerns about global banking.

UBS, Switzerland’s largest bank, agreed to buy Credit Suisse for 3 billion Swiss francs ($3.24bn) on Sunday amid a growing crisis of confidence in the global banking system.

The Swiss government said the deal was necessary to prevent economic turmoil from spreading throughout the country.

Credit Suisse, which last week received a $54bn cash injection from the Swiss central bank, is the latest financial institution to face a loss of confidence following the collapse of Silicon Valley Bank and Signature Bank in the United States.

The Zurich-based lender is among the world’s largest wealth managers and one of 30 banks considered to be of systemic importance to the global economy.