On Monday, Standard Chartered (STAN.L) CEO Bill Winters said a U.S. recession was improbable, but a period of negative growth was feasible.
“I think it’s less the question of a massive decline in the U.S. – I think that’s very, very unlikely,” Winters said at a conference in Dubai, adding that the economy remained “extremely strong.”
“But it’s also got a high inflation problem and interest rates that are either going to stay high or maybe even go higher… until the economy slows down.” Does that cause a massive recession? Not likely. Negative growth? Yes.”
He said Standard Chartered’s credit committee is “not tighter at all” after three regional U.S. banks failed.
“We were a net receiver of deposits during this period of global angst and we’ve got a super strong capital position and a very strong liquidity position,” he said, adding that the bank must monitor regulatory developments.
Winters said central banks need “to make sure that solvent banks – otherwise healthy banks – have access to liquidity,” adding that the U.S. Federal Reserve did not do well “in the eye in the storm.”
He stated the “reactive response in the U.S. was perfect,” ending the crisis, but “challenged banks” should have been given liquidity beforehand.
“Now they may still end up taking the bank into the FDIC, writing off the equity, imposing losses on the AT1 securities… that may still have happened, but in a more orderly way that wouldn’t have undermined confidence in the broader system.”
“I’m not really concerned about the problems in the banking sector in the U.S. or Switzerland – which is where they’ve been so far – spilling over into global economic activity,” he said, adding that he was “very optimistic about the Gulf.”
First, Abu Dhabi Bank, the UAE’s largest lender, explored acquiring Standard Chartered earlier this year but eventually withdrew.
Winters remarked, “We have all the capacity and resources we need to keep on growing and keep on living an independent life.”
“If someone wants to come in and talk to us about how they can make us better… okay, be my guest; we can always have a dialogue. Shareholders require that. “But I’m very confident we can deliver this package ourselves,” he continued.
Winters said “I don’t know” about the worst-case scenario for interest rates, but his bank was focused on 5.25% “for now and for a while.”
