The bankruptcy of some American banks cannot create a financial crisis

VCN – The recent collapse of several small and medium-sized US banks has raised concerns about the possibility of a financial crisis. However, according to experts, this event did not create the world financial crisis as feared and, at the same time, did not have much impact on the domestic stock market.
According to C&W, at this stage, keeping investors on the sidelines and watching can be a good strategy. Source: Internet
According to C&W, at this stage, keeping investors on the sidelines and watching can be a good strategy. Source: Internet

Financial crisis will not repeat

Silicon Valley Bank (SVB) - the 16th largest commercial bank in the US, fell into a liquidity crisis on March 10, 2023, followed by Signature Bank and Silvergate Bank. These are three of the 4,236 US commercial banks the Federal Deposit Insurance Corporation (FDIC) sponsored.

The three banks that just collapsed mainly focused their deposits and loans on technology (SVB bank) and cryptocurrencies (Signature bank and Silvergate bank).

According to experts of global real estate consulting firm Cushman & Wakefield (C&W), this is not a repeat of the great financial crisis. The picture of a crisis is still unclear, but a deep intervention by regulators could potentially help prevent the consequences from spreading.

According to C&W, the assets of SVB and Signature Bank are US$209 billion and US$118 billion, respectively, much less than the more than US$9 trillion owned by the four largest US banks during the Great Recession of 2008.

Besides that, the current economic fundamentals are much stronger than during the great financial crisis. The financial system is also more resilient to the global financial crisis. The banking system has undergone major reforms to prevent the same situation from happening again. As a result, banks are more capitalized and better protected against bad situations.

More importantly, the policy agency has also moved to react faster than in the crisis era. For example, although SVB officially collapsed on March 10, 2023, just two days later, the Treasury Department and the US Federal Reserve (FED) established an emergency credit facility for banks facing liquidity issues, protecting all deposits and providing initial confidence in the market.

Regarding the impact on the market, according to C&W's forecast, banks will continue to tighten lending to ensure capital risk reduction. At the same time, making sure that the US Federal Open Market Committee (FOMC) will have to recalculate monetary policy at its next meeting on March 21-22, under the failures of banks. The collapse of these banks could dampen the outlook for interest rates for the rest of the year.

According to C&W, at this stage, the market sky is only murky but not collapsing. During times like these, C&W thinks that keeping investors on the sidelines and watching can be a good strategy.

Little impact on the systemic risk of Asian markets

Regarding this incident, VNDIRECT Securities Company added two days after the collapse of SVB, a term funding program with a scale of US$25 billion was launched by the Fed to provide loans up to one year with collateral as US government bonds and loans at par. At the same time, the Fed, Treasury Department and the FDIC also activated a special exception, allowing protection of deposits larger than US$250,000.

This is one of the measures to reassure depositors and reduce systemic risks. However, as observed by VNDIRECT, risks are still present and concentrated in several small US commercial banks as liquidity and reserve ratio decline.

According to VNDIRECT, the market expects FED to reduce the intensity of interest rate hikes to save banks. The collapse of SVB is putting the Fed in a tough situation. On the one hand, it is still under pressure to raise operating interest rates to curb inflation. Meanwhile, continuing to raise interest rates may push financial institutions into a dangerous situation. Therefore, the market expects that the FED will reduce the intensity of interest rate hikes and start reducing the operating interest rates from quarter 4/2023, earlier than the previous forecast of quarter 1/2024.

VNDIRECT assessed that the impact of the SVB event on Asian finance is not major. According to regional experts, the current SVB crisis has little impact on the systemic risks of Asian markets, including Vietnam, largely thanks to the stable recovery of the Chinese economy.

China's real estate-credit market had passed the most difficult period when home sales started to grow positively from February 2023. On the other hand, the USD is expected to be weaker after the SVB event, which is also a positive factor for emerging countries.

Assessing the impact of this collapse on Vietnam's stock market, this unit maintains a cautious view in the first half of 2023. Accordingly, in Vietnam, Resolution 33/NQCP was just approved on March 11, 2023, which noted the problem of restructuring the debts of real estate enterprises. This is one of the most anticipated market news in recent times.

Besides that, the foreign capital inflow from ETFs is estimated at around VND 4 trillion and is expected to enter Vietnam will also be a positive factor for the domestic market.

"We still think that in the first half of 2023, the VN-Index's uptrend will be quite fragile and unstable in the context of low liquidity, pressure on interest rates, exchange rates and solvency tests for corporate maturity bonds are still there. Therefore, investors need to be very cautious in using leverage and observe the next movements of the world market. Priority should be given to "defensive targets" in the short term with groups of value stocks or attractive dividends", experts of VNDIRECT recommended.

Commenting on this event, banking and finance expert Nguyen Tri Hieu said that the collapse of SVB US bank had not had an impact on the global financial system yet. According to expert Nguyen Tri Hieu in Vietnam, this incident will not directly affect Vietnam's financial situation.

By Hoài Anh/Thanh Thuy

Related News

Without resolving three significant bottlenecks, real estate market

Without resolving three significant bottlenecks, real estate market's revival will face numerous challenges

VCN - Economic expert Vu Dinh Anh shares insights on the real estate market's recovery trajectory in 2024.
Credit package of VND120 trillion: must be disbursed as soon as conditions are met

Credit package of VND120 trillion: must be disbursed as soon as conditions are met

VCN - According to the State Bank of Vietnam (SBV), so far, only 28 out of 63 provincial People's Committees have sent documents or announced the list of projects participating in the VND120 trillion credit package, including 30 out of 68 projects with capital borrowing needs.
Numerous growth drivers, opening opportunities for enterprises

Numerous growth drivers, opening opportunities for enterprises

VCN - That is the appraisal given by experts at the seminar "HUBA Entrepreneurs' Coffee" under the theme: "Vietnam and HCMC's Economy in 2024 - Issues of interest to entrepreneurs," which took place on March 9, organized by the Ho Chi Minh City Business Association (HUBA).
Many real estate businesses face difficulties of cash flow

Many real estate businesses face difficulties of cash flow

VCN - Although many policies to overcome difficulties have been put forward by the Government, ministries and branches but many real estate businesses face the situation of being "thirsty for money". Finding solutions to unlock capital sources for the real estate market to promote recovery and development is essential.

Latest News

PM demands strengthened gold market management

PM demands strengthened gold market management

Prime Minister Pham Minh Chinh has asked the State Bank of Vietnam (SBV) to keep a close watch on international and domestic gold prices, and put in place measures and tools in a timely and effective way to regulate the gold market in line with regulations.
Budget expenditures reached VND393.5 trillion, growing 8.3% over the same period in the first quarter

Budget expenditures reached VND393.5 trillion, growing 8.3% over the same period in the first quarter

VCN - The Ministry of Finance said that the total balance of budget expenditure in March was estimated at VND140.3 trillion; accumulated budget expenditures in the first quarter of 2024 reached VND393.5 trillion, equal to 18.6% of current appropriation, an increase of 8.3% over the same period in 2023.
Inflationary pressure stems  from commodity price fluctuations

Inflationary pressure stems from commodity price fluctuations

VCN – According to a report from the Ministry of Finance, the domestic market prices in the first quarter were stable and fluctuated in accordance with the price management scenario of the Price Management Steering Committee. However, the current impact from adjusting the prices of essential goods is a pressure on inflation control.
SMEs offered loans at preferential rates of 1.2-4.4%

SMEs offered loans at preferential rates of 1.2-4.4%

To create additional capital mobilisation channels for small- and medium-sized enterprises (SMEs), Vietnam’s Small- and Medium-sized Enterprise Development Fund under the Ministry of Planning and Investment is offering SMEs loans at preferential interest rates of 1.2-4.4% per year.

More News

Public investment disbursement needs to be accelerated to boost growth: insiders

Public investment disbursement needs to be accelerated to boost growth: insiders

Public investment is currently still an important growth driver, which needs to be accelerated so as to help the economy achieve a 6.5% growth this year, according to insiders.
Banks seek to attract foreign capital

Banks seek to attract foreign capital

VCN - Banks are actively developing plans to attract capital from foreign investors through various methods, aiming to enhance their capital "buffers" and improve their management and operational standards to meet international levels.
Budget revenue collection for the first quarter of 2024 achieved quite well compared to current appropriation

Budget revenue collection for the first quarter of 2024 achieved quite well compared to current appropriation

VCN - In the first 3 months of 2024, total revenue collection is estimated to reach VND539.5 trillion, equal to 31.7% of current appropriation, an increase of 9.8% over the same period in 2023. According to the Ministry of Finance's assessment, revenue of the first quarter of 2024 is quite good compared to current appropriation, mainly due to the concentration of revenues arising in the fourth quarter of 2023 and the difference according to the tax finalization 2023 following the regime of declaration and payment to the state budget in the first quarter of 2024.
Continue to implement and complete important customs cooperation initiatives in ASEAN

Continue to implement and complete important customs cooperation initiatives in ASEAN

VCN - Talking to the press on the sidelines of the 28th ASEAN Finance Ministers' Meeting (AFMM 28) taking place in Luang Prabang, Laos, Vietnam’s Minister of Finance Ho Duc Phoc emphasized that the meeting affirms the determination of ASEAN financial agencies to strengthen cooperation and work together to solve common challenges of the region in the context of the world and the region facing many changes, difficulties and challenges.
28th AFMM, 11th AFMGM gain great success

28th AFMM, 11th AFMGM gain great success

VCN - In the framework of ASEAN 2024 Financial Cooperation, the 28th ASEAN Finance Ministers' Meeting, the 11th ASEAN Finance Ministers' and Central Bank Governors’ Meetings and related conferences were held in Luang Prabang, Laos from April 4-5. Minister of Finance Ho Duc Phoc led the delegation of the Ministry of Finance of Vietnam to attend the meetings.
Many positive signals from stock market upgrade

Many positive signals from stock market upgrade

VCN - Many crucial knots in the process of upgrading the stock market are being untangled by the Government and relevant agencies. Thanks to proactive moves from the management agencies, experts assessed that the stock market was likely to be upgraded according to the set objectives.
Promote the implementation of audit recommendations to prevent violations in public financial management

Promote the implementation of audit recommendations to prevent violations in public financial management

VCN - Recently, besides many ministries, branches, localities and units that have made efforts to implement audit conclusions and recommendations, there are still many conclusions and recommendations that have not been implemented. Many audit recommendations have been "on hold" for many years, leading to a backlog of financial resolution recommendations amounting to trillions of dong. For the implementation of recommendations to achieve high results and prevent violations in the management of public finances and public assets, there needs to be a synchronous solution from many sides.
The State Treasury ensures budget balance by effectively mobilizing Government bonds

The State Treasury ensures budget balance by effectively mobilizing Government bonds

VCN – The State Treasury continues to mobilize Government bonds effectively, thereby supporting budget management to promptly meet public spending demands.
Pressure on Corporate bond maturity will fall in mid-2024

Pressure on Corporate bond maturity will fall in mid-2024

VCN – In the first quarter of 2024, the Corporate bond placement has achieved positive results. According to assessment, in 2024, the gradual recovery of the real estate market will promote bond placement from real estate businesses as well as solve problems of late repayment of bond principal and interest in the new cycle.
Read More

Your care

Latest Most read
PM demands strengthened gold market management

PM demands strengthened gold market management

Prime Minister Pham Minh Chinh has asked the State Bank of Vietnam (SBV) to keep a close watch on international and domestic gold prices, and put in place measures and tools in a timely and effective way to regulate the gold market in line with regulations.
Budget expenditures reached VND393.5 trillion, growing 8.3% over the same period in the first quarter

Budget expenditures reached VND393.5 trillion, growing 8.3% over the same period in the first quarter

The Ministry of Finance said that the total balance of budget expenditure in March was estimated at VND140.3 trillion
Inflationary pressure stems  from commodity price fluctuations

Inflationary pressure stems from commodity price fluctuations

VCN - According to the Ministry of Finance, prices of essential goods are relatively stable in March 2024 because the supply is still quite abundant while demand is not high.
SMEs offered loans at preferential rates of 1.2-4.4%

SMEs offered loans at preferential rates of 1.2-4.4%

To create additional capital mobilisation channels for small- and medium-sized enterprises (SMEs), Vietnam’s Small- and Medium-sized Enterprise Development Fund under the Ministry of Planning and Investment is offering SMEs loans at preferential interest rates of 1.2-4.4% per year.
Public investment disbursement needs to be accelerated to boost growth: insiders

Public investment disbursement needs to be accelerated to boost growth: insiders

Public investment is currently still an important growth driver, which needs to be accelerated so as to help the economy achieve a 6.5% growth this year, according to insiders.
Mobile Version