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What's Wrong with the Banks

20 April 2023

Recently, we have seen unprecedented events in the banking sector in the US and Europe. A dramatic run at Silicon Valley Bank (SVB) on March 9 saw USD 42bn in deposit outflow in a day, and SVB was just one of three American banks to go under within a week. The collapse of SVB has sent shock waves across the banking sector worldwide and revealed significant flaws in the bank's corporate governance and risk management. In a crisis, once-loyal depositors could flee, forcing the bank to cover deposit outflows by selling assets. If so, the bank's losses would crystallise. Its capital cushion might look solid today, but its financial stability can rapidly deteriorate tomorrow. In the heart of Europe, the recent failure of Credit Swiss, a 167-year-old bank sold to its rival UBS to avoid a further banking sector meltdown, resulted from multiple risk management and compliance missteps, a series of scandals and a sharp erosion of clients' confidence.

Each crisis provides many materials to learn from. This roundtable gathered Board members from Emerging Market banks to discuss what lessons EM banks can learn from the most recent financial turmoil. We engaged with experienced banking analysts and Board members to understand what went wrong and how to mitigate and manage such a crisis going forward.

The video recording for this roundtable discussion can be viewed below.


Important Disclaimer: Chatham House Rules apply to this video recording. When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, subject to strict restrictions. Under these, the identities of third parties mentioned, event participants, the event speakers or their affiliations may not be revealed.

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