13 Mar 2023 International Economy The collapse of banks in the US has limited impact on Thailand. However, further developments merit close watch (Current Issue No.3385) คะแนนเฉลี่ย คะแนนเฉลี่ย 5 stars 4 stars 3 stars 2 stars 1 star The recent woes of select US banks may have disproven the notion of “Too Big to Fail”, as the financially troubled banks were shut down. US authorities and the US Federal Reserve (Fed) have accelerated the imposition of measures to protect depositors and other financial institutions, thus avoiding massive impacts that could trigger systemic risks. In terms of measures to support depositors, prior limits to deposit protection have been eased. Considering potential systemic risks caused by the collapse of Silicon Valley Bank and Signature Bank, the US authorities have allowed all of those two banks’ depositors to have access to their deposits, starting Monday, March 13, 2023. At the same time, the Fed has relaxed its conditions in order to provide liquidity to financial institutions. The first solution is the newly unveiled Bank Term Funding Program (BTFP) to offer secured loans with maturities of up to one year to other banks and financial institutions encountering problems of insufficient liquidity and/or deposit outflows. The second measure is the Fed’s potential easing of conditions for the discount window lending available to financial institutions. US regulators have introduced these measures to restore the confidence of depositors, forestall systemic risks and ensure sufficient liquidity of financial institutions. However, KResearch holds the view that close attention must be paid to the extent of the US banks’ problems at present as well as their future situation. This is because the newly announced measures can neither enhance financial institutions’ profitability, nor can they fully guarantee that other financial institutions will not have their weak performance brought to light amid the upward trend of US interest rates. Regarding any impact on Thailand, KResearch anticipates that the US banks’ collapse would indirectly cause volatility in the capital market. Meanwhile, any direct impact is expected to be limited as Thai financial institutions may have minimal or zero direct exposure to the troubled US banks. Aside from their diversified asset and deposit portfolios, Thai banks have gradually adjusted their investment strategies in fixed income instruments since 2022 to minimize the impact of rising interest rates. Additionally, Thai commercial banks have a liquidity coverage ratio higher than the threshold, and a capital adequacy ratio which is more robust than that of US banks on average. Annotation This research paper is published for general public. It is made up of various sources. Trustworthy, but the company can not authenticate. reliability The information may be changed at any time without prior notice. Data users need to be careful about the use of information. The Company will not be liable to any user or person for any damages arising from such use. The information in this report does not constitute an offer. Or advice on business decisions Anyhow. International Economy FedUS economy Related Analysis View all 14 Mar 2018 International Economy Thailand must brace for trade disputes between the US, EU and China, etc. (Current Issue No. 2905) The US is pressing ahead with trade measures against trade partners globally. In addition to their new ‘safeguard tariffs’ on imported solar panels and large washing machines imposed early in 2018, and more recently on imported steel and aluminum, the US is now preparing to implement protectionist measures against Chinese products valued at around USD60 billion. This direction will likely add significant pressure to global trade, thus, KResearch views that all eyes should be closely kept on negotiations between the US and EU, both being among the largest economies in the world. Details on those negotiations are expected to be released before the relevant ‘safeguard tariffs’ on steel and aluminum become effective at the end of next week. If the EU and China are exempted from these new tariffs, prevailing anxiety will ease. But to the contrary, without such exemptions, China and the EU may opt to implement their own trade protectionist measures against the US, as well. 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