The crisis that the banking industry has experienced over the past month is “not yet over” and will have consequences “for years to come,” JPMorgan Chase CEO Jamie Dimon warned in a letter to shareholders, published on Tuesday.
“The current crisis is not yet over, and even when it is behind us, there will be repercussions for years to come,” the iconic boss of the largest US bank by assets wrote in a document in the annual report.
In a matter of days, the banking industry saw the failure of three institutions in the United States, including two of the three largest bank failures in US history. The sequence continued with the emergency takeover of Credit Suisse by its Swiss rival UBS to prevent the major European player from imploding.
“While it is true that this banking crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them […] is absurd,” argued Jamie Dimon.
In the week that saw Silicon Valley Bank (SVB) and Signature Bank go under, smaller banks saw their deposits fall by $185 billion, while the big names in the sector saw a $120 billion jump, according to figures released by the US central bank (Fed).
“These failures have not been good for any bank, regardless of size,” the CEO stressed. “Any crisis that damages Americans’ trust in their banks damages all banks.”
“And while this has nothing to do with 2008, it is not easy to determine when this crisis will end,” wrote Dimon, who expects it to cause a tightening of financial conditions as banks and other lenders become more cautious.
