Markets are betting that the collapse of the US bank could slow RBA rate hikes

Emmett said ANZ still believes there will be two more rate hikes from the RBA. “In our view, as of this writing, the contagion is fairly limited and unlikely to affect the Fed or the RBA,” Emmett said.

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Big bank stocks helped drag Australia’s stock market lower on Monday, with the ASX 200 index falling 0.5 percent to 7108.8. Some ASX-listed tech companies, including Nitro Software, hotel software platform Siteminder and buy now, pay later business, Sezzle, said they hold deposits with SVB.

David Kirk, co-founder of tech-focused investment fund Bailador, which has investments in Siteminder, said he didn’t think there would be “systemic problems” caused by the collapse and interest rates of about 4 to 5 percent from a bank “not high “.

“I think everyone has had to learn how to run and manage their business for a long-term cost of 4 to 5 percent,” Kirk said.

Australian bank leaders, investors and local regulators all highlighted clear differences between SVB and Australian banks.

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The Australian Prudential Regulation Authority (APRA) said: “While the Australian banking industry has limited ties to the US-based Silicon Valley Bank, APRA is stepping up oversight of the local banking industry and asking them for more information on potential impacts.”

Andrew Martin, director of fund manager Alphinity, pointed to SVB’s concentrated client base in the technology sector and the fact that an unusually large proportion of its assets are in bonds rather than bank loans. As squeezed tech companies began withdrawing funds, SVB was forced to sell a $21 billion bond portfolio last week at a $1.8 billion loss.

“It’s incredibly hard to see — unless it causes less confidence in the system and people start switching to other banks — like it’s a systemic problem in its own right,” Martin said.

In a further move by regulators to prevent the meltdown from escalating, the Bank of England said on Monday night that global giant HSBC is buying the UK arm of Silicon Valley Bank for £1.

The Bank of England said in a statement the sale would stabilize Britain’s SVB business, minimize disruption to the tech sector and boost confidence in the financial system.

HSBC said SVB’s UK arm had about £5.5 billion ($9.9 billion) in loans and about £6.7 billion in deposits. £ and the transaction will be completed immediately. The Australian Banking Association also highlighted the differences between SVB and Australia’s lenders on Sunday night, citing the US bank’s high exposure to technology companies.

“By contrast, Australia’s banks are strong and governed by a different set of rules. ABA members are well diversified and therefore well positioned should a sector experience difficult financial circumstances,” the ABA said.