June 2, 2023

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The head of the largest US bank expects the banking crisis to end soon

JP Morgan CEO Jamie Dimon

Banking crisis

Damon: I hope not to impose too much regulations on banks and raise coverage on depositors’ money

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JPMorgan Chase & Co. CEO Jamie Dimon said the U.S. banking crisis that rocked global markets last month is likely to end, despite more unexpected setbacks.

Damon said in an interview with “CNN” that only a handful of lenders face the problems that have brought down Silicon Valley Bank, and when it starts reporting quarterly profits this week, the numbers look good. “Al-Arabiya”. .net” viewed by

Asked if more bank failures were possible, he said, “I don’t know.” “But I honestly know that if there is a solution, it will be solved.” “I think we’re nearing the end of this particular crisis,” he added.

The CEO added that it was acceptable for a bank to fail if it could prevent contagion to other lenders. He emphasized that the banking system will reach this point by “monitoring and changing certain things”. “Failure is okay, you don’t want a domino effect.”

He added that the U.S. banking system is safe because lenders are coming in with “extraordinary” capital and liquidity.

Fear of deflation

Dimon, 67, has run JPMorgan since 2005 and is the only CEO still in charge of a major bank since the 2008 financial crisis. Recent turmoil in the financial sector has increased the likelihood of a recession in the US, although a recession is not necessarily imminent.

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Regional US banks were in turmoil as deposits surged at Silicon Valley Bank and other lenders. After interest rates rose, the value of the securities they bought when interest rates were low decreased, and the sudden increase in withdrawals from customers forced some of them to sell those assets at a loss. He believes that the role of “SVB” had a huge impact due to the published crisis and increased pressure on the bank to withdraw deposits.

“Everybody knows about uninsured deposits, everybody knows about insured exposure, and everybody knows about portfolios to maturity,” Dimon said. “The only real difference” is SVB’s concentrated client base — a trait not shared by other regional banks, according to Dimon.

JP Morgan is one of the advisers to First Republic, a San Francisco-based lender that has lost 88% of its market value in shares this year as customers feared their money would suffer the same fate. An attempt by 11 strong banks, including JP Morgan, to shore up the company with $30 billion in deposits gave the First Republic more time to resolve the situation, but he declined to discuss the matter further.

His annual address

Dimon’s comments built on his annual letter to shareholders earlier this week, in which he acknowledged that the collapse of Silicon Valley and the hasty sale of Credit Suisse to UBS Group had “significantly changed the market’s view of the economy.”

Dimon concluded his letter by calling on the government not to overreact to the banking crisis by imposing more regulations on the industry. He called for raising the level of Federal Insurance Corporation coverage, which is currently capped at $250,000 per depositor.

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