Asia regulators move to shore up confidence as banking concerns mount

By Lewis Jackson and Selena Li

SYDNEY/HONG KONG (Reuters) -Asian policymakers and regulators sought to reassure investors on Thursday about the resilience of their banking systems and played down contagion risks after a crisis of confidence in the global banking sector triggered a market sell-off.

A plunge in shares of Credit Suisse on Wednesday triggered worries of a full-blown banking crisis. The bank on Thursday announced it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss central bank.

The Credit Suisse development came a week after a start-up lender in California failed.

Australian Treasurer Jim Chalmers said on Thursday local banks were well capitalised, after he convened a meeting earlier this week of major regulators and the central bank following the collapse of Silicon Valley Bank.

    “Our regulators are on top of things, our banks well-capitalised with strong liquidity positions, but it’s still a reminder of the risks, uncertainties and vulnerabilities in the global economy as interest rates rise,” said Chalmers.

    He made no mention of Credit Suisse, which saw its shares tank by up 30% on Wednesday ahead of it being given access to a liquidity lifeline from the Swiss National Bank (SNB).

Responding to Reuters query on Credit Suisse stock collapse and the wider market vulnerabilities, Hong Kong’s securities watchdog said it was currently “closely monitoring the situation to assess the impact” on the city’s market.

The SFC has “maintained close dialogue with other financial regulators” and the Hong Kong stock exchange on this matter, the Securities and Futures Commission of Hong Kong said in a statement.

The head of Japan’s banking lobby said that there were no signs at the moment of the Japanese financial system being affected by a crisis of confidence in Credit Suisse, as the country’s banks are well-capitalised.

In South Korea, the Financial Services Commission (FSC), said it was considering having its banks hold more capital to prepare for instability.

It said in a statement it was considering raising the countercyclical capital buffer (CCyB) ratio from the current zero percent as early as in the second half of this year.

The CCyB is designed to be adjusted so that lenders should accumulate capital to create buffers that strengthen the resilience of the banking sector during periods of stress when losses materialise.

(Reporting by Lewis Jackson, Selena Li, Choonsik Yoo; Writing by Scott Murdoch; Editing by Sumeet Chatterjee and Kim Coghill)