SVB Crisis: Banks In India Stand Out Amid 'Global Gloom And Doom', Says Macquarie

Amid all the “gloom and doom” in global banks, Indian lenders are distinguished with “hardly any exposure directly or indirectly to SVB,” according to Macquarie analyst Suresh Ganapathy

Financial firms in India outperformed regional peers on Monday as Jefferies Financial Group Inc. echoed Macquarie’s outlook.

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Banks in India reliance on local deposits cushions them as global peers are facing potential contagion from the woes emanating from Silicon Valley Bank, citing Macquarie Group news agency Bloomberg reported.

According to the report, amid all the “gloom and doom” in global banks, Indian lenders are distinguished with “hardly any exposure directly or indirectly to SVB,” Macquarie analyst Suresh Ganapathy wrote in emailed comments on Monday. The sector has “a domestic deposit funded system with investments in Indian government securities,” he wrote.

Financial firms in India outperformed regional peers on Monday as Jefferies Financial Group Inc. echoed Macquarie’s outlook. India's banking sector gauge rose as much as 0.6 per cent before erasing gains, while the MSCI AC Asia Pacific Financials Index dropped as much as 1.3 per cent to add to Friday’s 2.2 per cent slowdown.

In a Friday note, Ganapathy retained his bullish outlook for Indian lenders, expecting a “goldilocks scenario” for the next two years due to strong asset quality.

“Despite concerns of a slowdown in loan growth and margin compression, the earnings upgrade cycle continues for the banking sector,” the analyst wrote, raising the sector’s earnings growth estimates by 3 per cent -9 per cent for the years through March 2025.

Jefferies also said SVB Financial Group poses “low potential risk” to India, as a subsidiary was sold in 2015 and a rebranded version of that company has “good credit rating and stable liquidity.”

Analyst Prakhar Sharma echoed his view on Monday, saying the nation’s banks are “well-placed” as more than 60 per cent of deposits are household savings.

Meanwhile, HSBC Holdings is set to acquire the UK arm of Silicon Valley Bank (SVB) following the collapse of the US-based bank, news agency Bloomberg reported on Monday. According to the report, the London-listed lender’s "ring-fenced subsidiary, HSBC UK Bank, is acquiring Silicon Valley Bank UK Limited (SVB UK) for £1.