March 17, 2023
SINGAPORE – Singapore’s central bank has been in close contact with its counterpart in Switzerland, the Swiss Financial Market Supervisory Authority (Finma), over recent developments surrounding the troubled Credit Suisse Group.
In response to media queries, the Monetary Authority of Singapore (MAS) said on Thursday night that the Swiss bank’s Singapore branch has its main activities in private and investment banking, and does not serve retail customers.
Finma and the Swiss National Bank (SNB) said on Wednesday that Credit Suisse continues to meet the higher capital and liquidity requirements applicable to Swiss systemically important banks, and the SNB stands ready to provide liquidity to Credit Suisse.
Credit Suisse shares plunged on Wednesday after its largest shareholder Saudi National Bank ruled out investing any more in the bank on regulatory grounds. In a sign of stress, the cost of insuring the bank’s bonds against default for one year surged to levels not seen for big international banks since the 2008 financial crisis.
The bank’s shares bounced back the following day, soaring as much as 40 per cent in early Zurich trading after the lender secured a 50 billion Swiss franc (S$73 billion) lifeline from its central bank.
Switzerland’s second-biggest bank is one of 30 global financial institutions that are deemed to be systemically important by the international Financial Stability Board. This means their failure could trigger a wider financial crisis and threaten the global economy.
Credit Suisse declined to comment on the size of its Singapore operations.
Singapore bank stocks slumped on Thursday amid fears of wider financial contagion globally from the crisis, as well as a string of United States bank failures.
DBS shares dropped 1.27 per cent to $32.55, while OCBC slid 0.98 per cent to $12.15 and UOB dipped 0.71 per cent to $28. The benchmark Straits Times Index fell 0.55 per cent or 17.38 points.
DBS, OCBC and UOB told The Straits Times that their exposures to Credit Suisse are “insignificant”.
MAS said on Thursday that Singapore’s banking system remains sound and resilient, adding that lenders here are well-capitalised and conduct regular stress tests against credit and other risks.
“Their liquidity positions are healthy, underpinned by a stable and diversified funding base,” said MAS, adding that it will continue to closely monitor developments and remains in contact with Finma.