The CEO of hedge fund Man Group, Luke Ellis, has warned that the banking turmoil sparked by the collapse of Silicon Valley Bank is not over and that a significant number of banks will fail within two years.
Speaking at a Bloomberg conference in London on Wednesday, Ellis said, “I think we will have significantly more banks that don’t exist in 12-24 months.”
According to Reuters, he said that smaller and regional banks in the United States and challenger banks in Britain could be at risk. Ellis said that the growth in social media had accelerated how quickly concerns about banks circulate, and that “things happen at a much faster speed.”
The market chaos caused by the collapse of Silicon Valley Bank prompted the emergency rescue of Credit Suisse by Swiss rival UBS over the weekend.
Ellis’s warning follows the news that many hedge funds have made money from the banking sector volatility in recent days by betting against banks.
However, a spokesperson for the Bank of England, which supervises the health and stability of Britain’s financial system, said, “the UK banking system is well capitalised and funded, and remains safe and sound”.
Central banks globally have responded to the turmoil with coordinated measures to ensure the flow of cash between banks around the world.
Chief global strategist at Principal Asset Management, Seema Shah, said in a separate debate at the event; “I think policymakers have done enough to ringfence these really unique issues.”
The investment director at asset manager Ruffer LLP, Alexander Chartres, also expects there to be a recession in the United States and said that he would therefore invest across different asset classes.
