Global Courant 2023-04-25 11:00:06
Standard charteredThe bank’s CEO warned on Monday that the banking sector could face new challenges even as immediate risks from last month’s market turmoil have abated.
Bill Winters said other problems “could crop up in some form of crisis” as imbalances are exposed in some banks.
“I think we can put the crisis behind us. I don’t think we can put the issue behind us,” Winters told CNBC’s Joumanna Bercetche.
Swift regulatory action last month prevented the collapse of Silicon Valley Bank – and later Credit Suisse – from escalating into a wider banking crisis.
But Winters warned that the “dramatic change in the macroeconomic environment” — namely rapid interest rate hikes to curb skyrocketing inflation — had accentuated existing problems in some lenders that could emerge.
“That revealed some underlying flaws in business models, or exacerbated flaws that we knew were there, but maybe we didn’t know how serious they were,” he said.
There are other imbalances… that don’t come home to some form of crisis.”
Bill Winters
managing director, Standard Chartered
“Those shortcomings are still there,” Winters added.
“Other imbalances have developed during this long period of very low interest rates that have not settled down in some form of crisis. It is up to us to understand where those are in order to try to anticipate the changes that may come.,” he said.
Winters praised the “highly influential” work of both US and Swiss central bankers to counter wider contagion.
However, he noted that the episode also highlighted some regulatory shortcomings, which should be addressed with caution and consideration.
“There were clearly some regulatory gaps that were highlighted by this, and I have no doubt that we will close the specific gaps that have been identified,” he said.
“I think there is a risk that we are reacting now and trying to close every gap as if everyone had an equal gap to begin with, which is not the case,” he added.
“I think we could burden the economy with a huge amount of excess regulation in response to this if we’re not careful.”
Standard Chartered, which makes most of its profits in Asia and emerging economies, will report its results on Wednesday. Last quarter, the bank reported a 28% increase in annual pre-tax profit as global interest rate hikes boosted its loan income.
