Analyst: Closing SVB Is Not Too Impactful For The Indonesian Financial Sector, Will Not Be Like The 2008 Economic Crisis

Photo: Doc. Antara

JAKARTA - The closure and takeover of three bankrupt banks in the United States (US) is considered not to have much impact on the financial sector in Indonesia and will not repeat the big economic crisis from 2007 to 2008.

"This is because the United States government has moved quickly to anticipate by ensuring all deposits will be able to take back their money. Because since the 2007 subprime mortgage crisis, the American government has backed up more than 100 billion US dollars as a safety net in the event of this kind of incident," said Hendra Setiawan Boen, analyst and at the same time practitioner of bankruptcy law and debt restructuring from the Frans & Setiawan Law Office office, in a statement in Jakarta, quoted from Antara, Tuesday, March 14.

Hendra said that this incident only had a major impact on countries that had branches of the three banks. Even then, the governments of these countries immediately made efforts to mitigate risks. Britain, for example, escaped the crisis because HSBC banks were willing to buy the UK branch Silicon Valley Bank at a price of 1 pound and guaranteed deposit deposits.

In addition, the start-up company that received funding from the three branches of the bank will have difficulties like in the People's Republic of China. But to his knowledge, the three bankrupt banks do not have branches in Indonesia.

"Even if there are Indonesian startups or crypto companies that store or receive funds from the three banks, financial difficulties are only localized in these companies, which are too small to be able to have a systemic impact on Indonesia's finances," said Hendra.

Hendra also believes that Indonesian banks have high capital adequacy so that they will be able to stem the global financial turmoil and liquidity.

"The most important thing is, fundamentally, currently Indonesia is much stronger than during the 1997 monetary crisis and the 2007 subprime mortgage crisis. Institutional devices and regulations are also more rigid which allows Indonesia to avoid the financial crisis," said Hendra.

Three banks that have been known as strong supporters of the digital money industry as well as major lenders of startups were closed or taken over by the US government following the worsening balance sheet and were unable to meet the massive withdrawals from the depositors. The banks are Silicon Valley Bank, Silvergate Bank and Signature Bank.

The collapse of the three banks has caused concern about the risk of spreading to other sectors and countries, causing global financial system stability. Moreover, the collapse of Silicon Valley Bank has an impact on startups, especially if venture capital companies that have been supporting the finances of startups store funds in the bank.