Standard Chartered CEO issues warning

The banking sector may not be in the clear yet, despite last month’s market turmoil subsiding, according to Standard Chartered’s CEO, Bill Winters. Winters has warned that the sector may face fresh issues as other imbalances in some banks are exposed. He stated that “Those flaws are still there,” and other imbalances could cause a crisis.

The swift intervention by regulators prevented the collapse of Silicon Valley Bank and later Credit Suisse, from escalating into a wider banking crisis. However, the dramatic change in the macro-economic environment, namely rapid interest rate hikes to curb inflation, had accentuated existing issues at some lenders that could still play out.

Winters commended the highly impactful work of both US and Swiss central bankers in stemming wider contagion. However, he noted that the episode highlighted some regulatory shortcomings that would need to be addressed with caution and consideration. He emphasized the importance of closing specific gaps without reacting and trying to close every gap, treating each gap as equal, which is not the case. Winters warned of the risk of burdening the economy with excess regulation in response to this if regulators are not careful.

Standard Chartered makes most of its profit in Asia and emerging economies and is set to report earnings on Wednesday. Last quarter, the bank reported a 28% rise in annual pretax profit due to global interest rate hikes boosting its lending revenue. Winters stated that while the crisis may be behind us, the issue is not, and it is crucial to understand where the imbalances are to anticipate changes that may come.