The business model of a bank inherently entails the maturity transformation of deposits. Put differently: banks borrow in the short term to lend for the long term. This foundational principle exposes a bank to four risks that could imperil its solvency: credit risk, market risk, liquidity risk and operational risk.
The stresses the US banking system is now experiencing can be attributed to the interplay between market risk and liquidity risk . Credit Suisse’s troubles are attributable to the mismanagement of all four of these fundamental risks. With bank stocks around the globe taking a hit, are there attractive opportunities in the sector now? Let’s look at some candidates: ..
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JEAN PIERRE VERSTER: Stocks to bank onBank shares globally have been savaged in the wake of the SVB and Credit Suisse failures, which makes this an ideal time to buy some of the world’s best in this sector. We round up some options, writes JP_Verster.
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