Banks in the Asia-Pacific region are well-positioned to absorb higher funding costs and potential spillovers from recent volatility in global banking markets, S&P Global Ratings said in a report.
“Of the about 380 banks and nonbank financial institutions we rate in Asia-Pacific, we anticipate no rating actions directly related to stress in the U.S. regional bank sector, or from Europe after the recent takeover of Credit Suisse,” said Gavin Gunning, credit analyst at S&P Global Ratings.
While the outlook remains stable, S&P warned that past banking crises have shown contagion can take time to spread across markets.
In its Asia-Pacific Financial Institutions Monitor 2Q 2023, the credit ratings agency said a broader loss of confidence beyond U.S. regional banks or Credit Suisse could still emerge, although this is not its base-case scenario.
S&P noted that funding costs for banks have increased amid rising risk aversion.
The writedown of Credit Suisse’s additional Tier-1 (AT1) instruments to zero has heightened concerns, making it more expensive—and potentially more difficult—for some lenders to issue similar capital instruments.
