As rates increase, we get into riskier territory, says bank chief
Bloomberg News
Credit Suisse Group AG Chief Executive Officer Tidjane Thiam said he sees the risk of a “traumatic event” in global markets once the current period of low interest rates comes to an end.
“Frankly, it’s quite likely that there will be at the end of all this period a relatively traumatic event,” Thiam, 53, said in an interview with Bloomberg Television on Tuesday in New York. We’ve had this long period of low interest rates, there will be impact once rates start rising, Thiam said.
Speculation about the Federal Reserve’s rate outlook have prompted swings in securities markets as investors assess whether the global economy is strong enough to withstand a U.S. rate increase. Thiam said it’s important that central banks communicate transparently about their plans.
The comments were part of an interview in which Thiam discussed the opportunity for the bank to expand in managing money for wealthy clients in Asia and the strengths of the firm’s securities unit. Thiam last month announced a plan to reorganize Credit Suisse along geographical lines and focus more on wealth management while shrinking and splitting up the investment bank.
He has warned investors that 2016 would not be a good year as he restructures the company while he prepares to bolster capital by selling sell stock to existing investors. Being well capitalized is important for banks to withstand unforeseen events, he said.
