{"id":43446,"date":"2023-11-07T08:45:27","date_gmt":"2023-11-07T08:45:27","guid":{"rendered":"https:\/\/prosfunds.com\/business\/ubs-chair-warns-next-crisis-will-be-in-private-markets\/"},"modified":"2023-11-07T08:45:27","modified_gmt":"2023-11-07T08:45:27","slug":"ubs-chair-warns-next-crisis-will-be-in-private-markets","status":"publish","type":"post","link":"https:\/\/prosfunds.com\/?p=43446","title":{"rendered":"UBS chair warns next crisis will be in private markets"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=acc692c8-011b-4580-834b-64d1b9612f94\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>The next financial crisis is likely to be in the \u201cshadow\u201d non-bank lending sector, UBS chair Colm Kelleher has said, warning that the growth of lightly regulated private markets since the 2008 crisis is a \u201creal cause for concern\u201d. <\/p>\n<p>Speaking at a finance conference in Hong Kong on Tuesday, Kelleher said he was making the remarks \u201cat the risk of upsetting half the people in the room, some of whom are clients and competitors\u201d. <\/p>\n<p>However, he said, a large share of financial assets globally \u201care now in the non-bank financial intermediaries, the shadow sector\u2009.\u2009.\u2009.\u2009I think the next crisis when it happens will be in that sector, it will be a fiduciary crisis\u201d.<\/p>\n<p>Private lenders have emerged as a big force on Wall Street over the past decade, increasingly replacing banks as a source of financing for companies, after crisis-era regulation forced institutions to rein in risk-taking. The largest private lenders have raised billions of dollars to finance leveraged buyouts and companies\u2019 day-to-day operations. <\/p>\n<p>Kelleher\u2019s comments prompted a defence of the industry from Marc Rowan, chief executive of private markets behemoth Apollo Global Management, who spoke on a later panel at the same event. <\/p>\n<p>\u201cWhen you move something from the banking system to asset management, you move it, for the most part, from a levered system to an unlevered system,\u201d Rowan said. He said such lending \u201cadds robustness to the system\u201d. <\/p>\n<p>Rowan said Apollo held \u201cimmense amounts of liquidity\u201d and he could \u201cbarely get the fingerprint ink off my fingers\u201d because his dealings with regulators were so extensive. <\/p>\n<p>Goldman Sachs chief executive David Solomon, who was on the same panel, joked in response: \u201cYou could join our world and have more ink on your fingers if you\u2019d like.\u201d <\/p>\n<p>Later at the event, Jon Gray, president of Blackstone, which has a large private lending arm, also defended the industry. He said it was relatively low risk \u201cif we\u2019re managing money for a state pension fund and we lend it out on [an] unleveraged basis\u201d. <\/p>\n<p>Kelleher also spoke about his bank\u2019s takeover of Credit Suisse as it collapsed earlier this year. \u201cIt was clear we at UBS did not want to do the deal\u2009.\u2009.\u2009.\u2009we had our own strategy,\u201d he said. <\/p>\n<p>But \u201cby October 2022, it was clear Credit Suisse was a total falling knife\u201d, he said, and his bank enlisted \u201cthe mighty house of Morgan Stanley\u201d to \u201cget ready for this call we didn\u2019t want\u201d. <\/p>\n<p>Credit Suisse\u2019s collapse \u201cwas not about capital; this was about [its] business model and funding\u201d, Kelleher said. He said \u201cregulators in Switzerland need to be given more power to opine on these issues\u201d and added that it was \u201cmisguided\u201d for regulators to focus on the need for banks to hold even more capital. <\/p>\n<p>He was speaking as UBS unveiled a $785mn quarterly loss, its first in almost six years, following the takeover of Credit Suisse.<\/p>\n<p>Christian Sewing, chief executive of Deutsche Bank, said the thing that made him \u201cnervous\u201d was the state of capital markets. <\/p>\n<p>\u201cThey have been extremely resilient,\u201d he said. \u201cIf you think about what\u2019s going on in the world from a geopolitical point of view, an inflationary point of view\u2009.\u2009.\u2009.\u2009my biggest fear is there\u2019s one more geopolitical escalation and markets give up their calmness and you have a market event. We need to stay on alert.\u201d<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/acc692c8-011b-4580-834b-64d1b9612f94\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. The next financial crisis is likely to be in the \u201cshadow\u201d non-bank lending sector, UBS chair Colm Kelleher has said, warning that the growth of lightly regulated private markets since the 2008 crisis is a [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[23],"tags":[],"class_list":{"0":"post-43446","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>UBS chair warns next crisis will be in private markets | Prosfunds<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The next financial crisis is\" \/>\n<meta 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