March 2023 has been a difficult month for banks, with Silicon Valley Bank (SVB) collapsing, ongoing difficulties at First Republic Bank and the sale of Swiss banking giant Credit Suisse Group. As a result, fear has been spreading amongst investors about the health of the global banking sector and the possibilities of contagion. But will these fears turn into realities? Pensions & Investments turned to Peter Cecchini, director of investment research at Axonic Capital, for insight.
Drawing upon Axonic’s experience as an investment firm focused on the structured credit sector, Cecchini tells the publication that he does not expect the turmoil to spread throughout the banking sector, beyond weaker regional banks, due to U.S. Treasury regulators’ coordinated efforts.
“Large banks remain well-capitalized,” Cecchini explains. “We think it’s likely that more of the weakest of regional banks with low-quality loan books will require assistance, but the system will endure.”
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