The increases in financing interest rates at a global level affected the quality of the portfolios, which generated massive withdrawals of funds from these banking entities.
It is not ruled out that this might occur in another financial institution, indicated César Romero, Head of Research at Renta4 SAB. “Many think that if this happened to those banks, it might also happen to the bank that has their funds; that is why there is uncertainty, ”he stressed.
However, in the case of Peruvian banks, the analysts consulted maintain that there is no risk of bankruptcy, since they have stricter regulations when granting credit.
Along these lines, the Moody’s agency pointed out that the risk of contagion to Latin American banks is limited.
READ ALSO: Moody’s: contagion from US bank closures will be limited in Latin America
So, for Peru the ways of impact are different:
1. Delisting of some shares in the Lima Stock Exchange. The banking crisis in the US has generated the withdrawal of capital from certain sectors. One of them, the financier.
Thus, Romero indicates that since March 6, the date on which the value of the financial sector reached its peak, there has been a significant setback in the actions of the main banks in Peru. In the case of Intercorp, it accumulated a drop of 9.3%, while Credicorp’s shares fell by 4.1%.
Although the Peruvian bank appears to be solid, the declines in shares are due to the uncertainty of investors, Romero said. This trend would continue until there is more certainty that there will be no new bank failures.
Another effect is the drop in mining shares. Thus, Romero indicates that in the same period evaluated, the shares of Southern fell by 14%, Cerro Verde by 7% and Buenaventura by 5.4%. Here the effect occurs because the banking crisis raises the fear that there will be a recession, which would reduce the demand and value of commodities, added the specialist.
2. Rise in the value of safe haven assets: dollar and gold. During periods of uncertainty like the current one, many investors withdraw their capital from emerging markets to ‘refuge’ in assets considered safer, such as the dollar and gold, which raise their prices.
In the case of the dollar, it has been quite volatile in recent days, as more news regarding the banking crisis became known. For example, yesterday, following the information regarding financing problems for Credit Suisse, the price of the dollar reached a peak of S/ 3.80. But today, following learning that it will receive a loan from the Swiss National Bank, the markets calmed down and the price of the dollar closed at S/ 3.78. Even so, this is a higher level than the price of S/ 3.77 that it had when the banking crisis began.
Romero refers that the market will be expectant regarding possible new bankruptcies of banks in the world. If this occurs, it will generate an immediate effect on the exchange rate.
The economist Arturo García, professor of finance at Esan, agreed on this. “Yes, there will be upward pressure on the dollar due to the banking crisis, since it is a safe haven asset,” he remarked.
In the case of gold, its value accumulates a rise of 4% since the beginning of the banking crisis. It is currently trading at US$1,919 an ounce.
READ ALSO: $54 billion bailout for Credit Suisse gives limited respite to global banks
3. Higher cost of financing. Another effect of the banking crisis in the United States is marked by an increase in the cost of financing, with higher interest rates.
“This would affect the financing of Peruvian companies and the country, because when it is financed it takes foreign debt,” said Arturo García.
There is also an additional risk in the future, in the event that a person or company has direct operations with a financial entity in trouble. “If they go bankrupt, it will affect them,” García noted.
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