Local venture capital (VC) firms have raised their guard against investment in fintech and startups following the Silicon Valley Bank (SVB) fallout in the US.
Sam Tanskul, managing director of Krungsri Finnovate (KFIN), the corporate VC unit under Bank of Ayudhya (Krungsri), said the company would be more careful with investment in startups and fintech firms after the collapse of SVB.
He said KFIN has no exposure to SVB, US fintech or startups, meaning it will not be affected by the collapse.
Thanapong Na Ranong, managing director of Beacon Venture Capital, the corporate VC arm of Kasikornbank (KBank), said the firm had been more cautious regarding investments in fintech and startups since last year amid tightening liquidity and higher financial costs, in line with rising global interest rates.
Suwannee Jatsadasak, assistant governor of the Bank of Thailand, said in a statement on Monday the fallout of SVB would have a limited impact on Thailand's financial stability because local commercial banks have no direct exposure to the troubled US bank.
In addition, the total exposure of local banks to startups and fintech firms globally represents a marginal level of lower than 1% of Thai banks' capital, she said.
No local banks are investing in digital assets, while their subsidiaries invest in digital assets worth around 200 million baht. The central bank strictly supervises their investment in digital assets and venture capital.
A source in the startup industry who requested anonymity said some subsidiaries and VC firms of large local companies and bank groups, including SCB X and KBank, have some exposure and indirect investments in US fintech and startups.
The investments are expected to be insignificant and are an acceptable risk compared with the large asset size of the big corporations, said the source. The investments are mainly focused on studying technology.
The closure of SVB and Signature Bank were mainly caused by a liquidity crunch in the US market resulting from the Federal Reserve's aggressive policy rate hikes, said the source.
Concentration risk is another cause of the bank collapses. There was no problem with the asset quality of the closed banks, the source said.
In addition, the US government already said it would make depositors whole at the troubled banks.
Concentration risk is where a portfolio or investment is overly exposed to a particular asset, sector, industry or geographical region, making it more vulnerable to adverse events affecting that specific area.