BEVERLY HILLS, California (Reuters) – International Monetary Fund Managing Director Kristalina Georgieva said on Monday she expects more weaknesses to be exposed in the banking sector, only hours after First Republic Bank was rescued by JPMorgan Chase.
Speaking at the 2023 Milken Institute Global Conference in Beverly Hills, California, Georgieva immediately addressed the biggest topic of the day; the banking crisis that has been unnerving investors for weeks.
She said the quick transition from low to much higher interest rates played a role in uncovering weaknesses at certain banks and added that the pain may not be over.
“It doesn’t mean that we have a free pass,” she said. “It doesn’t mean that there wouldn’t be more vulnerabilities to come.” Investors have said on the sidelines of the conference that they are worried more drama could lie ahead as investors could target other smaller vulnerable banks.
Georgieva said what was noteworthy in the latest rescue was how quickly deposits moved away from San Francisco-based First Republic and said the speed was partly due to the power of social media.
However she also praised regulators and said she expects to see “new regulatory and disclosure thinking around how we deal with this.”
(Reporting by Svea Herbst-Bayliss and Carolina Mandl; Editing by Paul Simao)
