Loans and investments made by Eurozone banks in Singapore comprise only 5% of their total exposure.
Deputy Prime Minister Tharman Shanmugaratnam claims the direct impact of the Eurozone crisis on banks in Singapore could be insignificant.
His optimism stems from data that loans and investments made by Eurozone banks in Singapore comprise only 5% of their total exposure. Tharman also said that banks in Singapore also have a low dependence on the Eurozone for funding, with less than 8% of their funding coming from the Eurozone.
He also noted that Singapore’s credit supply has also not been greatly affected by the massive Eurozone deleveraging.
Tharman did acknowledge that should there be increased deterioration in the economies and financial markets of the Eurozone, Singapore will not be insulated.
The spillover effects will manifest largely through the trade and financial channels, he said. Trade-related sectors, including manufacturing and transport, are likely to be the most adversely affected.
In the financial services sector, sentiment-driven activities such as stock broking and foreign exchange trading could also see a decline in transaction volumes.
Do you know more about this story? Contact us anonymously through this link.