JPMorgan Warns of Rising Bank Funding Costs Amid NDFI Exposure Concerns
JPMorgan Chase & Co. has issued a stark warning about mounting credit stress in the banking sector following the bankruptcies of First Brands and Tricolor. The Jamie Dimon-led institution reports these failures are driving up funding costs across the industry as investors demand higher returns for holding financial stocks.
The bank's analysis reveals growing unease about opaque relationships between traditional lenders and non-depository financial institutions. Recent disclosures of exposure to alleged borrower fraud at two regional banks triggered last week's sell-off in US bank stocks, exacerbating market tensions.
In a client note titled 'NDFI exposure analysis: lack of disclosure drives higher implied cost of equity,' JPMorgan attributed the global bank sell-off to poor risk management and inadequate transparency. The IMF has echoed these concerns, calling for stronger oversight of bank-NDFI connections.
