StanChart CEO Winters Says Too Big to Fail Must be Reviewed After US Crisis

2023-05-08 21:27

The idea that banks are too big to fail needs to be reviewed in the wake of the

The idea that banks are too big to fail needs to be reviewed in the wake of the recent turmoil that’s seen the collapse of four US lenders, including Silicon Valley Bank, according to Standard Chartered Plc Chief Executive Officer Bill Winters.

“This whole too-big-to-fail question comes up again and again, but as we just saw a $250 billion bank named SVB was deemed too big to fail in a conventional resolution way, so this whole resolution concept of what is a too-big-to-fail bank is going to have to be reviewed,” Winters said during an on-stage interview at the Dubai Fintech Summit.

When asked if JPMorgan Chase & Co. CEO Jamie Dimon was getting to “too big for his boots” after the largest US lender agreed to acquire First Republic Bank in a government-led deal, Winters said: “Of course not. JPMorgan’s deposit share is about 12% right now. In many countries around the world, leading banks have much more than 12%.”

Winters said that even with JPMorgan handling that amount of deposits, the US is still a competitive market.

“What regulators need to be careful about is the concentrated deposit market share in sub-markets such as the New York city region, Chicago and Los Angeles, but 12% is manageable,” he added.

‘Super Strong’

The US banking woes began with the liquidation of a small crypto-friendly lender in early March before it spread to engulf three other regional banks. Standard Chartered became a “net receiver of global deposits during this period of global angst,” Winters said, adding that the British lender has a “super strong” capital position.

Winters said that the response by US regulators to provide access to funding for all of the nation’s banks was “perfect” but that the “ideal response” would have been to provide liquidity to the challenged banks before their demise.

While the struggling lenders may have still collapsed, it could have been “in a more orderly way that wouldn’t have undermined confidence in the broader system,” according to Winters.

“The fact is that you had solvent banks in the US and in Switzerland that died because they couldn’t get access to liquidity from anyone - not from their depositors or their central bank,” Winters said. “We have to ask the question why not. That’s an element of reform that’s been overlooked so far.”

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