KUALA LUMPUR: Bank Negara Malaysia (BNM) has assured that the country's banking system will maintain a strong capital level and resilient cash flow system amid the ongoing challenges in the banking sector in the United States (US).
The central bank stated that Malaysia's banking system does not have direct exposure to banks recently closed in the US.
Any indirect exposure from business partners or borrowers with connections to US banks is minimal, BNM said in a statement.
"All licensed banks in Malaysia, whether domestic or foreign-owned, large or small, must continuously comply with strict capital and liquidity regulations.
"These regulations are designed to ensure that banks can withstand periods of stress," the statement read.
BNM said this in response to media queries about Malaysia's banking system following concerns over the global banking crisis following the closure of Silicon Valley Bank (SVB), based in the US and Credit Suisse in Switzerland.
Furthermore, BNM stated that tests conducted regularly by the central bank and the banks have confirmed that they can withstand severe macroeconomic and financial shocks.
Banks in Malaysia remain in a good position to support lending to businesses and households in the event of various adverse scenarios.
"Stress test results are published in detail in the Financial Stability Review twice a year. BNM will continue to closely monitor the domestic financial system to ensure its orderly functioning," it added.
Credit Suisse, which is struggling to recover from a series of scandals that have eroded investor and client confidence, is the latest victim caught up in a crisis of confidence following the collapse of SVB last week.
The closure of SVB on Friday, followed by the collapse of Signature Bank two days later, forced US President Joe Biden to rush to assure that the financial system is safe and push for emergency measures that would give banks access to more funding.
Moody's Investors Services believes that the closure of the two banks in the US will have a limited impact on most of the Asia-Pacific (APAC)-rated financial institutions.
It said that most APAC institutions are not exposed to failed US banks, and only a few have immaterial exposures.