HomeBusinessSVB Collapse Offers Lesson for China: State Media

SVB Collapse Offers Lesson for China: State Media

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Official media say a similar collapse is unlikely in China but the situation has ‘important implications for lenders.

The collapse of Silicon Valley Bank (SVB) will not affect China’s financial system but offers an important lesson for the country’s banking industry, the official Securities Times has said.

An SVB-style bank failure is unlikely to happen in China but the incident would have “important implications for the development of China’s small- and medium-sized lenders, and the stability of China’s financial system”, the media outlet said in an editorial on Wednesday.

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The Securities Times said while the SVB incident reflects loosened regulation of such banks in the United States, a slew of financial regulatory reforms in China over the past years have cleaned up the industry, curbed shadow banking, and reduced financial risks.

In addition, China has been closing regulatory loopholes, the editorial said. In the latest move, China said last week it would set up a new national financial regulatory body consolidating oversight of the industry.

SVB’s China joint venture has also sought to ease fears among clients and investors, saying on Saturday it has a sound corporate structure and an independently operated balance sheet.

Source: REUTERS

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