High nominal interest rates caused major problems for banks in 2023. There are now new dangers lurking in the form of pension funds and insurers taking over more and more roles from banks. London Business School's Richard Portes was recently in conversation with journalist Joost Van Mierlo who writes for the Dutch publication, Financial Investigator.
The following is an extract from that interview.
US born but for many years a leading professor of economics at the London Business School, Richard Portes has lived through numerous banking crises.
Despite the tightening of supervision, unexpected incidents may still prove to be flashpoints for the banking community. Following the crises with SVB and Credit Suisse in 2023, Portes is not convinced that we are over the worst and says that it is high time to significantly tighten the equity capital of banks.
“Naturally this makes it more difficult for banks to find an attractive option to achieve returns, but they also become a lot safer as a consequence. It just depends on what you consider to be more important,” he says.
For the full article, click here to read the full interview, pgs. 8 through 10.
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