PETALING JAYA: No Lehman moment is expected to happen in 2023 following the collapse of three banks in the United States, including Silicon Valley Bank (SVB) and Signature Bank, says an analyst.
“Lehman moment” refers to the Sept 15, 2008 bankruptcy of Lehman Brothers, a global financial services firm now widely considered a critical event that triggered the 2008 global financial crisis.
SPI Asset Management managing partner Stephen Innes said banks were in a much better liquidity spot than they were in 2008 and Asia banks had minimal exposure to the US regional banks as they only deal with big Wall Street banks.
“So, contagion risk is minimal,” he told Bernama, adding that Credit Suisse has been a European outlier for years, so that was not a huge concern.
Credit Suisse is the biggest name ensnared in the turmoil unleashed by the collapse of US lenders SVB and Signature Bank over the past week, spurring a broad-based loss in investor confidence globally.
Innes explained that if other European banks were to start circling the drain, things could get nasty.
“However, the issue is the growth shock of the US regional banks, which are massive lenders to Main Street USA; if they stop lending because of a run on bank deposits, it could trigger a massive recession.
“So like in 2008, we could have a bank-side-driven recession, but the damage could be limited, with central banks likely to move back into a pause or cut mode.
“But uncertainty will run very high for a bit longer as when the human factor kicks in, who knows how rapid a bank run could go,” he added.
MIDF Research also noted that the investing community became worried that the market could see the starting point of a repeat of the 2008 global financial crisis.