Skopje, 14 Mart 2023

The collapse of the US Silicon Valley Bank (SVB) has no direct repercussion on our banking system, considering the small exposure to non-residents, as well as the traditional business model based on corporate and household lending at stable funding sources. The balance sheets of our banks are extremely solid, highly capitalized and liquid and with historically the best quality of the loan portfolio. However, for the purpose of cautious operating, the National Bank vigilantly monitors all developments.

According to the assessments of the relevant international institutions, primarily the US regulators, the latest developments in the US banking system should not affect the financial stability in the USA, and consequently there would be no significant transmission effects on the global financial stability either. According to US regulators, this is due to the fact that the US banking system is highly capitalized, resilient and operating on a solid ground, which is largely the result of post global financial crisis reforms that have provided better safeguards for the banking sector. This is supported by the quick reaction and measures of the US authorities, which reduce the possible systemic risks to minimum.

In this context, recent developments in the US banking system will not have direct effects on our banking system, considering that our banks are very little exposed to foreign countries, including the US economy and US banks, i.e. only 6.6% of the total liabilities of the banking system are abroad, of which only 5% of the claims are from abroad. Furthermore, the balance sheets of our banks are extremely solid, with a high level of capital (the highest level in the last decade), adequate liquidity and excellent loan portfolio quality.

Also, in this case it is particularly important that our banking system has a traditional business model, based on corporate and household lending with stable sources of funding. This model significantly differs from the US bank’s business model, which is one of the key reasons for its collapse, and is based on a high concentration of both the deposit base and the investments in securities (securities accounted for 60% of the total assets of the Silicon Valley Bank). Our banking system has a diversified and stable funding structure, where deposits account for 84% of total liabilities, and two-thirds of deposits belong to households. These assets are mainly placed in loans to non-financial entities, which participate with 60% in the total assets of the banks and which are of high quality. On the other hand, the share of banks' investments in securities issued by non-residents is minimal and at the level of the banking system is below 1%.