Commentaar Chris Iggo (AXA IM) op huidige situatie in bankensector

Bijgevoegd het commentaar van Chris Iggo, Chief Investment Officer bij AXA Investment Managers Core, over het omvallen van Silicon Valley Bank en de zorgen over Credit Suisse en eventuele gevolgen.

Enkele punten uit zijn betoog: Clearly sentiment in the Banking sector has been tarnished, which will weigh on spreads and risk assets. It is not anticipated that many other banks will confront the same problems as SVB. However, further banking problems cannot be ruled out, although recent policy initiatives from the Federal authorities should help contain the risks.

we do not see a systemic risk of a run on the entire banking system when deposits would be withdrawn and held in physical cash, as has typified bank runs in the past. In Europe, the risk of potential deposit flight from banks seems less than in the US while bank balance sheets have been more conservatively managed. From both a credit and equity point of view, we have a positive view on European banks. We believe fundamentals for the European financials sector are strong and see little risk of contagion from the Credit Suisse situation.

The events of 2008 were all about credit risk and weaknesses on bank balance sheets related to credit impairments. Today it is about interest rate risk and the cost of servicing debt and the challenges to managing assets and liabilities. Interest rates can be cut more quickly than credit issues can be resolved so we do not see the current situation being anything like 2008.

Recent events on Silicon Valley Bank and Credit Suisse have shown that sentiment can prevail. SVB’s failure is a stark reminder of how confidence is absolutely necessary to banks’ stability, and of how complete loss of it may push them to the brink very quickly via a deposit-run.

The SVB episode sheds a light on the not-so-straightforward impact on higher interest rates on banks, especially when variable rate liabilities collide with fixed-rate assets accumulated at historically low yields. This is another reason to be attentive to macro-financial developments as a potential harbinger of fragilities in the real economy.