The tremor in the global markets, which originated with the fall of the regional bank Silicon Valley Bank last Friday, will have a
limited impact
on the Latin American banking sector, according to the risk rating agency
Moody's
, which highlighted that the continent's financial institutions have "a
strict regulation and ample liquidity
with stable deposits".
The XLF index, which measures the performance of the United States banking sector, lost more than 13% in the last month, in a context of nervousness due to the rapid rise in rates by the Federal Reserve in the face of inflation that is far from abating.
Although the
"risk of contagion"
is what worries global investors the most, who take the 2008 financial crisis as a precedent, for Moody's in the case of Latin American banks
"it will be limited".
“Most of the banking systems in Latin America are concentrated in
large, solid and highly diversified banks.
Consequently, the concentration by segment towards a single industry is relatively limited, which helps to protect the banking systems in the region”, mentions Marianna Waltz, managing director of Moody's Investors Service.
In Argentina, for example, 76% of deposits are in large banks.
“In addition to strict market risk regulation in Latin America, banks in the region have frequently faced
prolonged periods of high interest rates and inflation,
which has helped their management teams build strong frameworks to control risks. market," he adds.
The report also highlights that the ratio of liquid assets to tangible assets for banks rated by Moody's in the region was 32.2%, according to the latest data available, which results in a more representative volume of liquid assets recorded at value. reasonable, which could lead to
smaller cuts in their market value
if a sale of these is needed to pay off depositors.
Also, according to the report, banks have constant access to deposits as a source of funding, as they rely on local institutional markets, rather than international ones, which reduces their exposure to running out of cash.
In addition, the
limited sophistication
of local financial markets and generally high interest rates have also supported the stability of deposits as a source of financing.
It is worth mentioning that only two financial institutions in Latin America,
Banco Bradesco of Brazil and Banco de Crédito e Inversiones of Chile,
have banking affiliates in the US, however, the risks for these banks are relatively contained given the operational focus in small transactions.
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