June 5, 2023

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A senior man in the largest US bank: “The banking crisis will have consequences for years to come” | Banking services

The crisis that has plagued banks in recent weeks is far from over and will have repercussions for several years to come. Jamie Dimon, CEO of JPMorgan Chase, warned about this in a letter to shareholders of the largest US bank.

In the United States, three banks failed within a few days last month, including two failures in the largest bank failures in US history. The crisis also had dire consequences in Europe, with Credit Suisse being taken over by Swiss rival UBS to prevent the collapse of that major European player.

“While it is true that the banking crisis ‘benefitsed’ the big banks, the idea that the crash was good for anyone is absurd,” Dimon wrote. When Silicon Valley Bank and Signature Bank went bankrupt, deposits at smaller banks fell $185 billion, while the big names jumped $120 billion. This is according to figures released by the US Central Bank.

It is not clear when the crisis will end

“Any crisis that erodes Americans’ confidence in their banks is bad for all institutions,” Dimon said. “Even if it had nothing to do with 2008, it is still difficult to say when this crisis will end.” JPMorgan’s CEO expects the crisis to lead to a tightening of financial conditions as banks and other lenders become more cautious.

In addition, Dimon anticipates organizational changes. He therefore calls on the authorities to avoid a “hasty, prolonged or politically motivated response”. He concludes, “We should not attempt to provide a regulatory framework that excludes the possibility of bankruptcy, but rather a system that limits the possibility of bankruptcy or infection.”

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