(Bloomberg) -- Asian bank stocks slid, resuming a selloff as worries over the health of Credit Suisse Group AG compounded concerns sparked by the sudden collapse of Silicon Valley Bank.

The MSCI Asia Pacific Financials Index slid as much as 2%, headed for its fourth loss in five sessions. Japanese megabanks were again among the biggest drags, though Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. pared early losses of more than 6% after Credit Suisse said it secured funding support from the Swiss National Bank and offered to repurchase debt.

Investors are on tenterhooks as troubles at Credit Suisse add to concerns about stress in the global banking system, which were sparked by the sudden collapse of three US institutions. Credit Suisse’s shares plunged by a record 24% Wednesday as Saudi National Bank, which became its biggest shareholder late last year, ruled out adding to its stake.

The slide in Credit Suisse’s stock “sparked a crisis of confidence that reverberated globally,” Mark Chadwick, an analyst, wrote in a note on Smartkarma. “Confidence is a crucial factor in the financial system, and this recent development shows how easily it can be shaken.”

Broader Asian equities also continued to suffer as concerns about the health of the global financial system reverberated across markets. The MSCI Asia Pacific Index lost as much as 1.3% before paring some of its loss. The latest rout has seen the regional benchmark erase all its advance for 2023.

“While Asian banks and the financial system in the region is fundamentally sound, the contagion risk is high in terms of market sentiment,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “Hong Kong in particular is high beta.”

Hong Kong’s benchmark Hang Seng Index was among the top losers in Asia on Thursday, with insurer AIA Group Ltd. sliding as much as 6.7% to be its biggest decliner.

Among other regional financial stocks, Hana Financial Group Inc. slid as much as 3.8% in Seoul while ANZ Group Holdings Ltd. dropped 2.6% in Sydney.

Uncertainty around the upcoming Federal Reserve’s rate decision has also risen as investors wait to see if the banking sector turmoil complicates the central bank’s efforts to raise rates further to get inflation under control.

“We were hoping that the storm had passed but this issue has added to more concerns regarding the global banking system, although CS is yet another isolated issue,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors. A quarter-point US rate increase “still looks likely, as any halt in rate hikes would signal that the Fed is panicking.”

Japanese banks feature prominently among the highest unrealized loss-to-equity ratios in the region, according to data compiled by Bloomberg on about 130 Asia Pacific lenders with more than $5 billion in assets. Jimoto Holdings Inc., Tsukuba Bank Ltd. and Fukushima Bank Ltd. are among those with unrealized loss-to-equity ratios of at least 9%. The three stocks are each down more than 10% this week.

Still, direct risks in Asia are seen as limited by many market watchers.

“There are no particular institutions like Credit Suisse that the market is concerned about in Asia, but an outlook of lower interest rates is negative for Japanese bank shares, and issues with USD liquidity always affect Korea,” said Michael Makdad, senior analyst at Morningstar.

--With assistance from Ishika Mookerjee and Winnie Hsu.

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