According to an annual letter, Laurence Fink, CEO of BlackRock, warned that the regional banking sector in the US remains at risk following the collapse of Silicon Valley Bank. Fink expressed concerns that more bank seizures could take place in the future due to rising interest rates, and that it is inevitable that some banks will need to pull back on lending to refine their balance sheets.
This may lead bank clients to turn more to capital markets for financing, as they face “asset-liability mismatches” similar to those that affected Silicon Valley Bank and other institutions.
While acknowledging that quick regulatory action has helped prevent a wider crisis, Fink added that it is too early to know the full extent of the damage and that markets remain on edge.
Fink also noted that low-interest rates have led some investors to seek higher-yielding but less liquid investments, potentially creating liquidity mismatches in the financial industry.