US lenders risk triggering new financial crisis, warns IMF

US real estate is increasingly stressed due to low tenancy rates, while a growing number of defaults are adding to the pain of banks who lent to the market.

The IMF said authorities must maintain continued vigilance to monitor the stress and dampen the risk of the next financial crisis.

The SVB collapse last March was triggered by banks failing to adjust to higher interest rates after a long period of rock-bottom rates.

The IMF criticised bank management teams for their approach, saying they “failed to adequately manage the associated interest rate and liquidity risks, presumably assuming inflation would be transitory”.

The US Federal Reserve has attempted to shore up the financial system in the wake of the SVB collapse, including adding more oversight of banks which have higher liquidity and interest rate risks.

The Fed is also keeping a close eye on a possible credit deterioration in commercial real estate.

The IMF praised the US authorities for successfully containing the immediate threats to the financial system from SVB.