ECONOMIC UNCERTAINTY
If there ’ s one word to describe the economic outlook of the global banking landscape , it ’ s unstable . This year has already seen the sudden collapse of the seemingly safe banking institution Silicon Valley Bank ( SVB ), which fell apart in a remarkable 48 hours after struggling with a ‘ hole ’ in its finances . Collapses haven ’ t been endemic to just North America either – Switzerland ’ s second-largest bank , Credit Suisse , collapsed in March 2023 before being purchased by its rival UBS in a US $ 3.3bn deal .
Sparking fears of a pandemic of instability in global banking and a string of further collapses , German Chancellor Olaf Scholz was prompted ( or forced ) to allay fears over a major banking collapse in an address to the European Parliament , saying banking – in the EU at least – “ remains stable ”.
Notwithstanding attempts to reassure markets , trust in the stability of global banking institutions remains tentative . Uncertainty itself poses problems too , particularly for bank lending rates . Throw in economic headwinds and fears of a potential recession , and it ’ s clear that banks need to adjust risk governance to deal with these external factors .
Uncertainty in banking : The lay of the land While some , like Scholz , have been key to play down the impact of bank closures this year , Dow Jones Head of Risk & Compliance , Joel Lange , believes the collapse of SVB “ rocked the banking world , sending regulators racing to stabilise the global financial system on both sides of the Atlantic .”
He adds : “ This was a major failure of corporate governance . Reports following SVB ’ s collapse indicated that the bank operated without a full-time chief risk officer for more than a year and that the board risk
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