©Portal. FILE PHOTO: Shayne Elliott, Chief Executive of Australia and New Zealand Banking Group, speaks during a Portal Newsmaker event in Sydney, Australia November 30, 2016. Portal/David Gray
By Renju Jose
SYDNEY (Portal) – The CEO of Australia and New Zealand banking group said on Monday the recent turmoil in the global banking system had the potential to trigger a financial crisis, although it was early to predict it could bring one similar to 2008.
Authorities around the world are on high alert over the fallout from the recent banking turmoil following the collapse of the US’s Silicon Valley Bank (SVB) and Signature Bank (NASDAQ:) and the emergency takeover of Credit Suisse.
“It’s obviously a crisis for some, but is it a financial crisis, who knows? Does it have the potential to become one? Yes, it has the potential to become one,” CEO Shayne Elliott said in an interview on the bank’s website.
But he said it was premature to suggest the current situation could lead to “another GFC,” referring to the global financial crisis some 15 years ago that plunged the world’s major advanced economies into their worst recession since the Great Depression crashed in the 1930s.
Australian banks did not suffer as much as those in the US and UK during the 2008 crisis, thanks in part to tighter lending standards and a more resilient domestic economy.
“That’s a different topic. It really has to do with the global war on inflation and how central banks are raising rates very quickly to fight this and that’s causing losses,” Elliott, the top executive at the country’s No. 4 lender, said .
Australia’s banking regulator announced shortly after the collapse of startup-focused lender SVB that it had stepped up supervision of local banks.
Global regulators have acted much faster this time to support banks, having learned lessons from previous crises, Elliott said.
“Nevertheless, it’s clearly not over yet. I don’t think you can sit here and say, ‘Well, that’s all done, Silicon Valley Bank and Credit Suisse, and you know life is going back to normal’. Those things tend to drag on over a long period of time.”
Rachel Slade, personal banking group executive at the country’s second-largest lender, National Australia Bank (OTC:) Ltd, told the Australian Financial Review on Monday that mortgage customers were showing signs of tension after 10 straight rate hikes, but there were none yet Peaks at the default values.
Treasurer Jim Chalmers said Australia was in a good position to weather some of the volatility as its banks were well capitalised, while the Reserve Bank of Australia noted last week that banks were “undoubtedly strong”.