The collapse of banks in the United States will have a limited effect on the banking systems of Latin Americawhich have little exposure to the affected institutions, strict regulation and ample liquidity, points out a report by the risk measurement agency Moody’s released this Thursday.
According to Moody’s, Latin American banks “have limited direct exposure” to Silicon Valley Bank (SVB)which filed for bankruptcy, and Silvergate Bank and Signature Bank (SNY), which were closed, “as well as ‘fintechs’ and crypto asset companies, both through deposits and loans”.
In sense, The analysis indicates that only the Brazilian Bradesco and the Chilean Banco de Crédito e Inversiones (BCI) have subsidiaries in the United States but the risks in those banks “are relatively contained” given the size of their operations and the market they are targeting.
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Bradesco BAC Florida Bank focuses on the Brazilian community in Florida and on Brazilian companies with business in the areaMeanwhile he City National Bank (CNB)a subsidiary of BCI, has a larger operation, aimed at small and medium-sized companies and people with high purchasing power, according to Moody’s.
Most of the banking systems in Latin America are concentrated in large, solid and highly diversified banks. Consequently, segment concentration towards a single industry is relatively limited, which helps protect banking systems in the region,” says Moody’s Investors Service Managing Director Marianna Waltz.
Latin American banks, ‘armored’ against market risks
According to Waltz, in addition to “strict market risk regulation in Latin America, banks in the region have often faced prolonged periods of high interest rates and inflationwhich has helped their management teams build robust frameworks to control market risks.”
Moody’s adds that Latin American banks “maintain high volumes of liquid assets that are mostly made up of investments in national government securities” and most are not focused on a single industry, such as technology companies.
Although financial technology companies have expanded significantly in the region over the last eight years, no bank in Latin America has a niche operation focused on serving primarily the ‘fintech’ segment,” he adds.
The study also points out that Latin American banks “have constant access to deposits as a source of financing, since they depend on local institutional markets, instead of international ones, which reduces their exposure to running out of cash.”
Other points in favor are that local financial markets are not as sophisticated in terms of investments and that the high interest rates in the countries of the region “support the stability of deposits as a source of financing,” indicates the firm’s analysis. financial.
EFE International news agency based in Madrid and present in more than 110 countries.