CIMB Thai expects the SVB case to be a niche problem due to the Fed's accelerating interest rates. That affects bond prices - Bank customers continue to lose money until the withdrawal of money is not believed to spread like the 2008 financial crisis.

Dr. Amornthep Javala, Executive Vice President executives of research and investment advisory offices CIMB Thai Bank said on the Federal Deposit Insurance Corp (FDIC) order to shut down Silicon Valley Bank (SVB) that the bank's problems suddenly arose. Share prices fell 60% in a single day on fears of a large capital increase. to offset the massive losses from the sale of US government bonds. Causing people to be insecure, flock to withdraw large amounts of money Most of them come from partners Private Equity, Venture Capital, Tech, Health tech just on March 9th. just one day About 1/4 of all deposits were withdrawn. The bank lacks cash flow. Faced with liquidity problems that spread to the bankruptcy problem, the FDIC had to suspend the business of transferring deposits to the newly established bank. Emphasize that this crisis is not like 2008 when Lehman fell. At that time, there was the problem of credit risk from investing in real estate derivatives. Now is market risk or liquidity from rising interest rates? and lack of good management of deposit and credit term

Recently, March 12, 2023, the US authorities, led by the Treasury Department, the Federal Reserve (Fed) and the FDIC issued a joint statement. Announcing SVB Bank All Deposit Guarantees, depositors will have access to all of their funds beginning Monday, March 13, and announcing a special fund to be provided to the FDIC to ensure sufficient funds are available. with the US banking system make the money market, the capital market of the United States adjusted in a better direction respond to such aid measures

However, the stock market is expected to remain volatile on concerns about which bank will be the next to fail. While inflation may decrease somewhat, but it should not go down as quickly as in the past. Inflation in the United States is likely to decrease from last year's average of 8%, this year it should be around 4%. The Fed is expected to raise interest rates in March by only 0.25% and the highest interest rate may be at 5.75% in a gradual manner in the case of SVB. It might not be heavy if it's not obtrusive and intense.

However, it is believed that the SVB case will affect Thailand in the short term through money and capital markets that are likely to be volatile this week. There may be some sell-off in risky assets in the short term. But the market should weigh in on the slowdown in wages and rising unemployment in the US. But may wait for inflation, retail sales, etc. to see if the Fed will raise interest rates more strongly or not, which in the case of SVB may weigh on financial market stability. causing the Fed to raise interest rates gradually Money should come back to emerging markets. The baht is likely to move sideways between 35-36 baht per US dollar. If the SVB's problems continue to spread or there is uncertainty, it may affect the Thai export sector. which is not good anyway to slow down As for oil prices in the world market, it is likely to shrink as demand weakens, resulting in a decline in Thai imports. There should not be a problem with the current account deficit as before. As for the Thai tourism sector, it should not be affected. Overall, the problem is concentrated in the US and is unlikely to affect Asia-Pacific much. Especially China, which is still growing well but of course exports are not bright.

For Thai commercial banks, this should not be a problem. Because the Bank of Thailand (BOT) does not directly allow banks to invest in Crypto while the financial group is still strictly regulated by Thai regulators.

Source: Thai News Agency