(News Bulletin 247) – Jamie Dimon believes that the forfeiture of the Californian bank SVB has caused a crisis whose repercussions will last several years. For him, this bankruptcy undermines all American banks.

Jamie Dimon issues a warning. The crisis experienced by the banking sector for a month is “not over” and will have consequences “over several years”, warned the CEO of JPMorgan Chase, in a letter to shareholders published on Tuesday.

“The current crisis is not over, and even when it is behind us, it will have repercussions for several years”, wrote the emblematic boss of the first American bank by the size of the assets, in a document appearing in the Annual Report.

Within days, the sector experienced the failure of three institutions in the United States, including two of the three largest bank failures in American history. The sequence continued with the takeover, in disaster, of Credit Suisse by its Swiss competitor UBS to avoid the implosion of this major European player.

Bankruptcies “good for people”

“While it is true that this banking crisis ‘benefited’ the larger banks, which received an influx of deposits from smaller institutions, the idea that this collapse was good for anyone is absurd.” , argued Jamie Dimon.

In the week that saw Silicon Valley Bank (SVB) and Signature Bank go out of business, smaller banks saw their deposits shrink by $185 billion, while big names in the marketplace saw a jump of 120 billion, according to figures published by the American central bank (Fed).

“These bankruptcies have not been good for any bank, regardless of its size,” hammered the CEO. “Any crisis that affects Americans’ confidence in their banks is bad for all institutions.”

Towards a credit crunch

“And even if it has nothing to do with 2008, it is not easy to determine when this crisis will end,” wrote Jamie Dimon, who expects it “to cause a tightening of conditions financial as banks and other lenders will become more cautious.”

While he expects the banking crisis to lead to changes in regulation, he urges authorities to avoid “a knee-jerk, drawn-out or politically driven response”.

“We shouldn’t try to set up a diet [réglementaire] that eliminates the possibility of bankruptcy,” he says, “but rather a system that reduces the likelihood of default and contagion.”

(With AFP)