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Reuters NEXT-US banking execs on geopolitical risks, soft landing

Published 11/08/2023, 12:59 PM
Updated 11/09/2023, 11:55 AM
© Reuters. Bank of America Chairman and CEO Brian Moynihan speaks at the ReutersNEXT Newsmaker event in New York City, New York, U.S., November 8, 2023. REUTERS/Brendan McDermid

(Reuters) -Top U.S. banking executives warned that geopolitical tensions pose a major risk to economic growth, and could upset the poise markets have attained in recent months as more investors have been hoping for a soft landing.

Here are some excerpts from their interviews at the Reuters NEXT conference in New York:

PETER ORSZAG, CEO AT LAZARD * GEOPOLITICS

"It's an unusual combination of a pretty constructive U.S. macroeconomic environment combined with severe geopolitical risk." * POSSIBLE U.S. GOVERNMENT SHUTDOWN

"A disagreement over whether funding for Ukraine should continue or not is likely to be (the cause) if the government shuts down." * POSSIBLE M&A IN BANKING INDUSTRY

"Given the current stance of antitrust regulators, outside of a crisis, it's still a challenging environment (for consolidation in regional banking industry.)"

BRIAN MOYNIHAN, CEO AT BANK OF AMERICA * SOFT LANDING EXPECTATIONS

"Our research team is the best in the business. They have moved to the soft landing category. They have a slowdown in the economy in the middle of next year." * RATE HIKE EXPECTATIONS

"You're seeing a precipitous slowdown in consumer spending... Financial conditions have tightened. Loans are more expensive so people aren't borrowing as much. Mortgage rates have moved up and the housing market has slowed down."

"We have one more rate increase, whether that happens or not. And then starting to bring them down in the second half of next year." * ON INFLATION COMING BACK TO 2% RANGE

"It takes to the end of '25 to get inflation down to the low twos level." * ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) ISSUES

"On a given day, we are criticized for being a large lender to energy companies. On the same day, we are criticized for being a large renewable lender. So you gotta have it right if everybody doesn't like you." * ON SUCCESSION

"We have a succession planning exercise ... nothing is left to chance here, when I decide or the board decides that my time is up we will activate that plan." * ON DEALING WITH POTENTIAL CYBERSECURITY THREATS

"You keep dedicating more resources. You cooperate heavily among the industry and with the government."

"The real value is, over the last 10 years, the administration cooperation with the private sector has been much increased. That's helpful because the information can flow faster and we can defend ourselves better."

HOLLY O'NEILL, PRESIDENT, RETAIL BANKING AT BANK OF AMERICA * CONSUMER SPENDING

"There's a lot of uncertainty across the globe, for sure, and I think that weighs on them but when you look at the actual health of the consumer, it is very strong." * CAPITAL RULES

"The biggest risk is the disruption from regulation and the impact that will have on the system and then the downstream impact on the consumer."

JIM ESPOSITO, CO-HEAD OF GLOBAL BANKING AND MARKETS AT GOLDMAN SACHS * TRADING AND INVESTMENT BANKING

"We're sitting on what is one of the more interesting trading environments in my career. For the medium term, the dealmaking environment will indeed be a little bit less robust." * BOND MARKETS

"There is a little bit of a supply-demand imbalance in government bond markets."

SOLITA MARCELLI, CHIEF INVESTMENT OFFICER AMERICAS FOR UBS GLOBAL WEALTH MANAGEMENT * INVESTMENT TRENDS

"Clients are slowly moving out of cash" into fixed income, "we really caution them to not go that much longer out on the curve because the longer end is more susceptible to technical factors like supply."

SINEAD COLTON GRANT, BNY MELLON HEAD OF INVESTOR SOLUTIONS AND INCOMING CHIEF INVESTMENT OFFICER * GEOPOLITICAL TENSIONS

"With geopolitical tensions elevated in the world, I think it's very important that we don't conflate the very muted response that we've seen, say over the last four to five weeks, with markets being very sanguine, because they're not.

© Reuters. Bank of America Chairman and CEO Brian Moynihan speaks at the ReutersNEXT Newsmaker event in New York City, New York, U.S., November 8, 2023. REUTERS/Brendan McDermid

"They're watching the evolution very, very closely and there's an assumption that all these events remain fairly contained. Should that turn out not to be the case, you will see markets react quite sharply, and that would reverberate beyond the equity markets."

To view the live broadcast of the World Stage go to the Reuters NEXT news page: https://www.reuters.com/world/reuters-next/

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