Stanhope Capital Chief Executive Officer Daniel Pinto warned that fallout from the banking crisis will be “substantial” and the Federal Reserve must bear the blame.
“I agree we are not on the verge of a massive run on the banks but there will be very, very substantial consequences,” Pinto said in an interview with Francine Lacqua at the Bloomberg Invest conference in London on Wednesday. These will include consolidation, especially in the US, as well as by banks specializing, he added.
The comments follow one of the wildest weeks in the recent history of finance which saw fears of a banking crisis emerge from the collapse of Silicon Valley Bank and quickly spread across continents. Three banks have collapsed and a fourth, Credit Suisse Group AG was forced to merge with rival UBS Group AG as regulators sought to avoid a broader financial collapse. Another, First Republic Bank, is wobbling.
The effects reverberated across markets with bank stocks, corporate debt, commodities and US Treasuries all seeing sudden moves that took many traders by surprise.
“The culprit is, I may say, the Federal Reserve,” Pinto said. “Taking interest rates from 0% to 4.75%, and probably to 5%, over eight months is irresponsible and was not necessary,” he said.
A variety of leaders from asset management and financial firms are speaking at the Bloomberg Invest conference (streaming on LIVE ). They are debating wealth creation in the region and the biggest risks and opportunities facing investors in the UK, Europe and beyond.
All times GMT.
Debate Over Investing in Art (2:12 p.m.)
Since the mid-1950s, art prices have increased at a rate of about 8.5% annually, Oliver Barker, chairman of Sotheby’s Europe, said at the Bloomberg Invest conference.
The rise of art funds that offer fractional ownership has changed the way the asset class is viewed, Barker said. Art used to be a “passion play,” with buyers looking to enjoy it on their walls. It’s “too early” to say whether returns on partial stakes will be significant.
There’s a “huge amount of speculation” on younger artists, he said, while high-end art is a particularly attractive asset for wealthy families prepared to hold as part of a longer-term strategy.
Retail Traders Have Closed the Gap (12:24 p.m.)
A flood of available information, including on social media, has helped retail investors “narrow the gap” on financial pros, according to a panel at the Bloomberg Invest conference.
During the recent banking turbulence, traders on the platform eToro stayed active, showing a willingness to navigate risk, according to Lule Demmissie, the company’s US CEO. She said more and more retail traders are using options and other “instruments that require more sophistication” to