The CEO of Man Group, Luke Ellis, has expressed concerns over the ongoing banking turmoil following the collapse of Silicon Valley Bank. Speaking at a Bloomberg conference in London, Ellis stated that he does not believe the crisis in the sector is over, and he expects a significant number of banks to fail within the next two years.
According to Ellis, smaller and regional banks in the United States and challenger banks in Britain could be particularly vulnerable. Ellis also noted that social media has played a significant role in the acceleration of concerns about banks, whether they are good or bad news.
The growth in social media has contributed to the speed at which information travels and the extent to which it can impact financial markets. Hedge funds have been able to take advantage of this volatility by betting against banks.
Despite Ellis’s concerns, a spokesperson for the Bank of England reassured the public that the UK banking system remains well-capitalized and funded, and that it is stable. Central banks around the world have also taken coordinated measures to ensure the flow of cash between banks during this turbulent period.
Seema Shah, chief global strategist at Principal Asset Management, believes that policymakers have done enough to contain the crisis. Shah stated that these issues are unique, and policymakers have taken appropriate measures to ring fence them.
On the other hand, Alexander Chartres, investment director at asset manager Ruffer LLP, expects there to be a recession in the United States. He recommends investing across different asset classes to mitigate potential losses.
Future of banking sector after SVB crisis in 2023
The banking sector has been under significant pressure in recent years due to factors such as low-interest rates, increased regulatory scrutiny, and the growing threat of cyberattacks. The ongoing COVID-19 pandemic has only added to the challenges faced by banks, with economic uncertainty and the rise of remote work arrangements.
The Bank of England remains confident in the stability of the UK banking system, and central banks globally are working together to ensure the flow of cash between banks. Investors, however, should remain cautious and diversify their investments across different asset classes to manage potential risks.
Man Group is a global hedge fund and asset management company. It was founded in 1783 as a sugar cooperage and brokerage business in London, and has since evolved into a leading alternative investment management firm.
Man Group manages a diverse range of investment strategies across multiple asset classes, including equities, fixed income, commodities, and alternative investments. The company operates in over 15 countries and has over 1,400 employees worldwide.