Australian banks are unlikely to encounter similar developments to those that have recently shaken the global industry but the events may pose a risk to smaller institutions, S&P Global Ratings said in a report.
The recent collapse of Silicon Valley Bank and downgrade of First Republic Bank (US-based regional banks) highlighted the risks from an asset-liability mismatch and unstable deposits, S&P said.
In addition, the write-off of additional Tier-1 capital instruments issued by Switzerland-based Credit Suisse had “startled” many market participants.
“Australian banks have different business models to these banks,” said Sharad Jain, a credit analyst at S&P Global Ratings.
“They are mainly focused on conventional banking and operate with sound funding and liquidity under prudential regulations.