It’s been reported that 2024 will definitely be the year of a new banking crisis, according to the IMF. Check out the latest reports about what happened below.
2024 banking crisis
According to a former Deputy Director at the IMF’s Policy Development and Review Department, Desmond Lachman, there is a high probability of a new financial crisis within the US banking industry.
He predicts that the year 2024 will be particularly challenging for American banks.
This information was reported by the Chinese state-run Xinhua news agency.
Lachman said the following:
“It is all too likely that we will have another round of the regional bank crisis in 2024. All of this could pose a serious risk to the economic recovery.”
Lachman, a senior fellow at the American Enterprise Institute (AEI), warns that regional banks face a precarious situation, as 18% of their loan portfolios are in the troubled commercial real estate industry.
“Major property investors, such as Brookfield and Blackstone, are starting to walk away from their mortgages, Lachman noted.
The scenario makes it more likely that commercial property owners will, possibly by next year, start defaulting on their loans. That would be very bad news for small and mid-size banks.”
It has been reported that US banks have experienced a net decrease in deposits over the past year.
According to data from the St. Louis Fed, between December 21, 2022 and December 20, 2023, US banks lost $359.32 billion in deposits.
A recent survey conducted by the Federal Reserve, which polled market professionals, academics, investment funds, and research and advisory firms, revealed that the US banking industry is currently in a state of concern.
The survey participants have identified two key reasons why banks are at risk of another crisis, despite having withstood financial tremors in 2022.
“Although survey respondents noted the banking sector has stabilized since the period of acute stress earlier this year, many highlighted risks of renewed deposit outflows given that large portions of deposits remain uninsured.
Many respondents continued to link risks of re-emerging banking-sector stress to potential losses on CRE (commercial real estate) exposures, particularly among smaller and regional banks.”
