LONDON, April 20 (Reuters) – The vice chairman of huge UBS shareholder BlackRock Philipp Hildebrand mentioned on Thursday consideration was now on how the financial institution positions itself going ahead following its compelled rescue of Credit score Suisse final month.
Talking about broader banking turmoil that additionally noticed two U.S. lenders collapse in March, Hildebrand, whose agency is the world’s largest asset supervisor, mentioned financial institution liquidity laws would doubtless have to be revisited.
“The query now can be how does this settle, and the way does UBS place itself going ahead, given fairly intense political discussions in Switzerland round competitors, round dimension, and plenty of different points,” Hildebrand, a former chairman of the Swiss central financial institution, instructed a Bloomberg convention in Dublin.
UBS, Switzerland’s greatest financial institution, agreed in March to purchase rival Credit score Suisse (CSGN.S) for 3 billion Swiss francs in inventory and to imagine as much as 5 billion francs in losses, in a merger engineered by Swiss authorities to keep away from additional turmoil in international banking growing right into a broader disaster.
“This story shouldn’t be over however the emphasis has now shifted to what UBS goes to do with it, versus what the federal government did,” Hildebrand mentioned. “I believe the federal government dealt with it, below very tough circumstances, very properly.”
Talking about broader banking turmoil, which has seen sizable deposit outflows in the US, “there have been some critical errors made when it comes to technique, when it comes to threat administration”, Hildebrand mentioned.
“(We’re) going to should say that our assumptions on liquidity have been most likely too optimistic and so they got here out of the 2008 disaster, that we’ll should revisit that and I am positive regulators will do this.”
Requested whether or not Credit score Suisse’s rescue would result in additional financial institution consolidation in Europe, Hildebrand mentioned there could be extra give attention to smaller U.S. banks.
He added that he was not “significantly anxious” a few systematic downside in Europe’s banking system.
NO SOFT LANDING
On the worldwide financial system, Hildebrand mentioned a recession would doubtless be essential to tame inflation, however that he did not see any situation the place the U.S. Federal Reserve cuts rates of interest this yr as merchants at the moment count on.
“The gentle touchdown concept that’s been so embedded in individuals’s minds from the good moderation interval, I do not see that occuring,” he mentioned.
“Many individuals even within the markets haven’t fairly understood in my thoughts how a lot we at the moment are in a special (central financial institution) regime in comparison with the final 4 many years.”
Referring to the looming U.S. debt ceiling deadline, Hildebrand mentioned the U.S. by no means having defaulted on its debt is a “fundamental anchor” of markets.
“All we will do I believe, collectively… is to hope that everybody in the US understands how vital the sanctity of the sovereign signature of the main forex, of the main bond market, of the main financial system of the world is.”
Reporting by Yoruk Bahceli and Padraic Halpin; modifying by Dhara Ranasinghe
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