Sridhar Vembu’s Not Sold On End Of Global Banking Turmoil; JPMorgan’s Dimon Concurs

Zoho CEO Sridhar Vembu on Monday said he is not convinced that the banking crisis globally has phased over. This viewpoint was echoed by JPMorgan Chase & Co CEO Jamie Dimon on Tuesday who wrote a letter to shareholders warning that the banking crisis in the US is ongoing and impact will be felt for years.

Dimon’s 43-page annual message covered many topics including the current crisis and mentioned that the banking system is under a lot of stress after the failure of Silicon Valley Bank and Credit Suisse’s UBS rescue. 

In the letter, Dimon said, “The market’s odds for recession have increased.”

Speaking on uncertain global banking conditions, Vembu during a conversation expressed his doubts over how SVB and First Republic Bank collapses were declared to be “contained”, during an interview with BW Businessworld.

“Do you believe it is 'contained'? I do not have any faith any Central Bank or Federal Reserves – it’s the fundamental cause of uncertainty. We have very wrong economic theories driving their behavior and policy. That has serious consequences for the rest of us. This kind of uncertainty cannot be easily overcome by any one business alone,” said the Zoho CEO.

Meanwhile, JPMorgan’s Jamie Dimon emphasised that new regulations to address the current issue must by created thoughtfully and it’s needed to take into account rules to deal with failed banks. 

Dimon was at the crux of the effort that led to arrangement of USD 30 billion lifeline for First Republic Bank.

When BW Businessworld asked about a timeline for recovery of the global economy, Vembu said, “We are in a massive earthquake zone called the Global Economy. If an earthquake comes, the house will at least shake and may be some tiles from the roof will fall. That’s how I see it.”

He added that it one couldn’t forecast normalisation.

To function in such an intense climate, Vembu recommended companies to take it month-to-month and also focus on fundamentals. “On what matters now – long-term R&D and building a company culture. That's why we have taken a no-layoff policy at Zoho. We would rather share the pain with our employees,” he said.