Lehman Brothers: 5 Years On

Five years after the collapse of Lehman Brothers, should investors be reconsidering the banking sector?

Jupiter Asset Management 16 September, 2013 | 12:33AM
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This article is part of Morningstar's "Perspectives" series, written by third-party contributors. Here, Guy de Blonay, manager of the Jupiter Financial Opportunities Fund, says banks are now largely “fit-for-purpose” five years on from the collapse of Lehman Brothers.

In the same way many people can still recall what they were doing when they first heard about the attack on the Twin Towers or the death of Princess Diana so the collapse of Lehman Brothers on September 15 2008 has proved a defining moment for many working in the global financial industry. Brought down by its exposure to the sub-prime mortgage market, the demise of the 158-year old investment bank has come to embody an era where light-touch regulation and weak regulatory supervision fuelled a culture of excessive risk taking.

Five years on, better policing by politicians, regulators and the banks themselves have, in our view, transformed the way financial institutions go about their business. Yet challenges remain. Even if the nascent economic recovery bodes well for the sector, the global imbalances sparked by years of ultra-low interest rates could prove tricky to negotiate while the issue of banks that are “too big to fail” has yet to be fully addressed.

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Jupiter Asset Management  Jupiter Fund Management is a UK fund management group, managing equity and bond investments for private and institutional investors.

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