© Reuters. abdrn: banking crises, how to choose bonds
Luke Hickmore, bond manager at abrdn, analyzes the consequences of the recent banking crises on bonds and explains why the move towards other investment solutions
What have we learned from the last banking crisis? To make the point is Luke Hickmorebond manager of abrdn, who reviewed the differences between the “historic” bank crises and what happened in 2023. After what happened in the US at Silicon Valley Bank, First Republic and Signature Bank, plus Credit Suisse in Europe, the markets are waiting to see if stability will prevail or if other banks will fall.
THE HISTORY OF BANKING CRISIS
The common trait, the expert begins, is the crisis of confidence that generates panic and leads to the flight of capital. A pattern that has been repeated for 300 years, but whose modalities have changed profoundly over time, because today money can leave accounts at any time: there is no longer any need to queue at the counters, just one click and the game is done. Furthermore, compared to the past when bank failures were always motivated by a specific reason (wars, famines, bankruptcy of railway companies), today, even the mere threat of a problem can create havoc. “Trust in financial institutions is easily undermined by rumors that can go viral in a nanosecond,” comments Luke Hickmore…
** This article was written by FinanciaLounge