For the first event in GlobalCapital’s new GC Live series of editorially led, topical discussions on capital markets, we gathered a select group of UK bank treasurers, bank capital investors, investment bankers and other market participants in London in early December to discuss what conclusions to draw from a tumultuous year for the banking sector.
Banks generally have been enjoying the new world of higher interest rates and an economy that almost seems to have got away with a soft landing. But risk was lurking below the surface, and in March it burst out, with the sudden failure of Silicon Valley Bank and then the tottering of Credit Suisse, which forced the Swiss authorities to make UBS rescue it.
In our first panel discussion, edited and published here, treasurers from Barclays, NatWest and Nationwide and a debt capital markets specialist from Deutsche Bank trade views on whether the March shock showed weakness in the current banking system and regulatory structure, or strength.
Some classic banking risks had been ignored, such as the build-up of interest rate risk in US regional banks. Perils such as deposit runs may have been sharpened by social media and moving money at the touch of a screen.
Credit Suisse’s failure, though it complied with regulatory requirements, showed that these do not make the system impregnable — but then, the system is not supposed to prevent all bank failures. That a global bank could fail, without causing contagion across the market, arguably showed that, even if not perfect, the system did its job.
|Daniel Fairclough, group treasurer, Barclays
|Donal Quaid, treasurer, NatWest Group
|Rob Collins, deputy treasurer, Nationwide Building Society
|Josh Benson, director, UK FIG debt capital markets, Deutsche Bank
|Toby Fildes, managing director, GlobalCapital (moderator)