Emerging Markets Should Prepare for Radical Banks Balance Sheet Restructuring

The New York Times, Tue Jun 2, B3 ” Poor Countries Facing an Unparalleled Debt Crisis”

Once the dust settles, we expect the banks are going to get hit. 77 poor countries scheduled to make $62 billion payments on debts in 2020.  While governments will stand behind banks as the Coronacrisis unravels, most banks will be left in a weaker position when this ends. I recommend that banks need to now begin to build capital (and cut balance sheets) from recent levels, take account of an expected increasing level of loan losses, not just from problems emerging to date but from risks of a possible “ credit crunch”, likely over the course of a developing economic down-turn. Here is one scenario how this may play out.

bank bs restructuring 2021

Author: Sameer_Jain

Partner. Sameer Jain is founder of FinTech ActiveAllocator.com, the world’s first portal that seamlessly integrates traditional, illiquid and alternative investments within portfolios. Prior to this he was Chief Economist & Managing Director at AR Capital. Before that he headed Investment Content & Strategy at UBS Alternative Investments. At UBS, he served as a non-voting member of the Wealth Management Research investment committee, and as a capital allocator was responsible for all illiquid investing including fund manager selection and due diligence across the platform. Prior to UBS he headed product development & investment research at Citigroup Alternative Investments that managed over $75 billion of alternative investments across hedge funds, managed futures, private equity, credit structures, infrastructure and real estate. Here he led a team that developed proprietary models for portfolio strategy and asset allocation with alternative investments, provided investment support and research to pension plans, sovereign wealth funds, endowments as well as internal clients including Citi Private Bank. Before this he was with Cambridge Alternative Investments and SunGard (System Access) where he travelled to over 80 countries for work across Europe, Asia, Middle-East and Africa. He has written over 30 academic and practitioner articles on alternative investments with thousands of downloads at SSRN, presented at over a hundred industry conferences and has coauthored a book, Active Equity Management. Mr. Jain has multiple degrees in engineering, management, public administration and policy and is a graduate of Massachusetts Institute of Technology and Harvard University. He is a recipient of the Alfred Sloan Fellowship and subsequently was a Fellow of Public Policy and Management at the Harvard Kennedy School of Government for a year. He holds Series 7 and 66 securities licenses.

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