Start-ups in Singapore to face more difficulties in fundraising after US bank failures, say experts and VCs

Start-ups in Singapore to face more difficulties in fundraising after US bank failures, say experts and VCs

Mr Wickramasinghe noted that there may be “some third-degree impact” from the banks’ exposure to private equity or venture capital firms that are investors in affected companies, but this is “several layers removed and the Singapore banks are carrying significant capital buffers”.

MAS, in its statement, said the banking system in Singapore remains “sound and resilient” with “insignificant exposures” to the failed US banks.

Banks in Singapore are well-capitalised and conduct regular stress tests against interest rate and other risks. They also have healthy liquidity positions, underpinned by a stable and diversified funding base, the central bank added.

“These factors will allow them to weather potential stresses from global financial developments,” it said.

Meanwhile, experts described the collapse of SVB as an “idiosyncratic” development due to its unique business model, rather than an indication of broader systemic issues in the US banking sector.

Most commercial banks in the US still have a diversified business model and are much better capitalised than they were before the 2008 global financial crisis (GFC), said UOB’s head of research Suan Teck Kin.

“While some smaller and weaker banks may get into difficulties, the latest episode is unlikely to be a replay of the GFC when the entire financial system seized up,” he added.

Actions by the US regulators thus far have also “greatly reduced the anxiety of depositors across the entire banking system, thus preventing the deterioration of confidence and minimising systemic risks”, Mr Suan said.

Agreeing, Assoc Prof Yadav said the moves taken by the US regulators to protect all deposits and set up a special lending facility for banks will assure customers and help to avert any further bank failures.

“The SVB failure is unlikely to lead to a financial crisis in the US or any other country,” he said.

However, the latest development should serve as “a warning signal for all”, with the rapid increase in interest rates being one of the contributing factors to SVB’s financial troubles.

With rate hikes happening around the world, the current episode “calls for all financial institutions to continually reassess the sensitivity of their portfolios to all kinds of risk including interest rate risk”, Assoc Prof Yadav said.

“The banking regulators in all countries must have taken note of these events. We need to continually review and improve the regulation and supervision of large banks.”