Banking Crisis ‘Not Yet Over’, JPMorgan Boss Warns

In his annual letter to shareholders, the chief executive of JPMorgan Chase, one of the world’s largest banks, warned that the banking crisis triggered by the collapse of Silicon Valley Bank (SVB) and Credit Suisse is “not yet over” and could pose further risks to the global financial system.

Jamie Dimon, who steered JPMorgan through the 2008 financial crisis, said the events of the past few weeks had exposed “some fault lines and issues” in the banking industry and the regulatory framework. He attributed the failure of SVB, a US bank that catered to tech startups and venture capitalists, to “poor risk management, excessive leverage, fraud and greed”. He said SVB’s collapse had caused “significant losses” for many banks, including JPMorgan, which had lent money to SVB or its clients.

He also referred to the demise of Credit Suisse, a Swiss bank that had been exposed to billions of dollars of risky bets on US stocks made by a family office called Archegos Capital Management. He said this had triggered a “fire sale” of assets that had roiled the markets and inflicted losses on several banks.

According to Dimon, these incidents had raised questions about the adequacy of capital and liquidity requirements for banks, the transparency and disclosure of financial transactions, the oversight and supervision of non-bank entities, and the coordination and communication among regulators.

He assured his shareholders that JPMorgan was well prepared to deal with such shocks, as it had a strong balance sheet, a diversified business model, a robust risk management system and a “fortress” culture. He said the bank had learned from its own mistakes in the past, such as the “London Whale” trading scandal in 2012, which cost the bank more than $6 billion.

Dimon also expressed his commitment to serving his customers, shareholders, employees and communities, and to supporting the economic recovery from the pandemic. He said the bank had provided relief to millions of customers and small businesses affected by Covid-19, and had invested in social causes such as racial equity, climate change and financial inclusion.

He was optimistic about the future of the US and the global economy, as vaccines were rolled out and stimulus measures were implemented. He expected a “very strong” growth in 2023 and 2024, driven by consumer spending, business investment and government spending.

However, he also cautioned that there were still some uncertainties and challenges ahead, such as new variants of the virus, inflation pressures, geopolitical tensions, cyberattacks and social unrest. He said JPMorgan would remain vigilant and resilient in the face of these risks.

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