Local exposure to Silicon Valley Bank limited: FSC - 台北時報

Staff writer, with CNA

Taiwanese banks, insurance companies and securities firms had limited exposure to the collapse of California-based Silicon Valley Bank, the Financial Supervisory Commission (FSC) said on Friday.

The commission said local banking, insurance and securities industries had no exposure through their own funds to Silicon Valley Bank, and that the only investments affected would have been mutual funds managed by Taiwanese trust firms amounting to about NT$300 million (US$9.73 million).

Silicon Valley Bank, the 16th-largest bank in the US, failed after depositors rushed to withdraw money last week amid anxiety over the bank’s health. The bank served mostly technology start-ups and venture capital-backed companies.

Photo: Bloomberg

Global financial markets last week were also affected by the closing of Silvergate Bank, which said it was ceasing its operations after servicing a collapsing cryptocurrency market.

Local financial institutions were also not highly exposed to the Blackstone Group defaulting on 531 million euros (US$565.33 million) of commercial mortgage-backed securities due to rising interest rates worldwide, the commission said.

Local lending and investments in the US private equity firm totaled NT$122.85 billion, it said.

Taiwanese banks had NT$3.32 trillion invested in US banking institutions as of the end of January, while the amount for the local insurance industry was NT$8.55 trillion, the commission said.

Mutual funds invested in the US and managed by local investment trust companies totaled NT$1.43 trillion, while those managed by overseas firms and bought by local investors reached NT$1.75 trillion in January, it said.

The commission said it is observing the global financial situation and, if necessary, would implement measures to bolster the local financial industry’s risk control over overseas lending and investment.

Taiwan Institute of Economic Research president Chang Chien-yi (張建一) said the problems experienced by Silicon Valley Bank were much smaller than the circumstances that prompted the 2008 global financial crisis.

The bank’s collapse should be viewed as an individual case that is not likely to cause systemic risks affecting the US banking industry, Chang said.

Taishin Financial Holding Co chief economist Mason Li (李鎮宇) said the risk is controllable and would not cause a systemic problem, given that the bank’s business was limited to technology and green energy industries, and its customers were unlisted start-ups and their private equity backers.

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