Standard CharteredThe bank’s chief executive warned on Monday that the banking industry could face new problems, even as the immediate risks from last month’s market turmoil have subsided.
Bill Winters said other problems could “root from some form of crisis” as imbalances in some banks were exposed.
“I think we can leave the crisis behind. I don’t think we can leave the problem behind,” Winters told CNBC’s Joumanna Bercetche.
The swift intervention of regulators last month prevented The fall of Silicon Valley Bank – And after that, Credit Suisse — from an escalation into a broader banking crisis.
But Winters warned that the “significant change in the macroeconomic environment” – namely the rapid increase in interest rates aimed at curbing soaring inflation – has highlighted current problems for some. loans that are still unresolved.
“That exposed some fundamental flaws in the business models or exacerbated the flaws that we knew to exist but perhaps failed to appreciate,” he said. .
There are other imbalances… that haven’t emerged in some kind of crisis.”
winter bill
Managing Director, Standard Chartered
“Those flaws are still there,” Winters added.
“There are other imbalances that have formed over this long period of time with very low interest rates that don’t show up in some form of crisis. We have a duty to understand where those are to try and predict. possible changes,” he said.
Winters praised the “massive” work by both the US and Swiss central banks in containing the wider contagion.
However, he noted that the episode also highlights some regulatory shortcomings, which should be addressed with caution and consideration.
“Clearly there are some legal loopholes that have been highlighted through this and I’m sure we’ll fill in the specific gaps that have been identified,” he said.
“I think there’s a risk that we’re going to react now and try to close all the gaps as if everyone were equally spaced in the first place, and that’s not true,” he added.
“I think we can burden the economy with a large amount of excess regulation to accommodate this if we’re not careful.”
Standard Chartered, which generates most of its profits in Asia and emerging economies, will report earnings on Wednesday. Last quarter, the bank reported a Annual profit before tax increased 28% as rising global interest rates boosted its lending revenue.
