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Tuesday, March 14, 2023
Khaleej Times - SVB, Signature Bank collapse: Will it affect startups in the UAE?
The abrupt and unexpected collapse of Silicon Valley Bank (SVB) and Signature Bank in the US has sent shockwaves through global markets. However, its impact on the UAE is minimal, experts have said.
The dollar effect
Bas Kooijman, CEO and asset manager of DHF Capital S.A., said since the UAE dirham is linked to the dollar, “anything significant that happens to the dollar will have an effect on the dirham”.
“When the market opened today (Monday), we saw a 0-0.4 per cent gap between the euro-dirham parity which meant, based on this news, we saw an immediate effect on the currency rates from a technical point of view.”
"This could have a downstream impact on technology companies. They may not be a direct client of SVB and the other banks that are currently in trouble, but they might have suppliers or people that they are working directly with Silicon Valley that may not be able to pay their bills," said Kooijman.
Checks and balances
Dhaval Jasani, founder and CEO, ZTI Global Consulting, said the UAE Central Bank has adequate checks and balances in place. Its monitoring tools ensure stability in the country’s financial sector, he added.
He did not rule out the possibility of entities in the UAE’s tech sector having some exposure to SVB, “be it in the form of deposits or other products”.
Affected startups should look at appointing US-based lawyers to coordinate with the regulators and authorities concerned, he said.
“Dealing with banks and financial institutions away from the home ground may lead to complications, as is the case with SVB,” he added.
“As a precaution, entities should exercise caution (when) dealing with banks and financial institutions in foreign jurisdictions.”Source: