NatWest chair blames collapse of Silicon Valley Bank and Credit Suisse on 'poor risk management'

Poor risk management and “long-standing, idiosyncratic challenges” were largely to blame for the collapse of Silicon Valley Bank and the rescue of Credit Suisse, according to the chairman of NatWest.

Speaking at the banking giant’s annual shareholder meeting in Edinburgh, Sir Howard Davies stressed that the RBS owner had built a “robust and resilient balance sheet with strong capital and liquidity, a largely secured retail loan book and well-diversified commercial lending”. He added: “Tight risk management underpins our strategy and ensures we are well-positioned for the future. We nonetheless continue to monitor customer activity and behaviours closely for signs of stress, taking action where appropriate”.

Davies said the nation has seen the impact that economic uncertainty and rising interest rates can have on the banking sector, following the collapse of Silicon Valley Bank and other US lenders, and the rescue takeover of Credit Suisse by rival UBS.

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Davies added: “While there are some grounds for cautious optimism, with employment remaining high, the economic environment will remain challenging for some time to come. The UK may or may not experience a technical recession in 2023 - economic forecasters differ on that point - but the economy is unlikely to grow significantly.”

NatWest chief executive Dame Alison Rose told investors: “I, and my executive team, continue to monitor the market movements closely to ensure that we are well placed to continue supporting our customers. Yet, despite not seeing significant signs of financial distress or changes in behaviour amongst our customers, we know that people, families, and businesses across the country are struggling.”

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