By François Rimeu, LFAM Strategist, La Française AM

The current stress in the banking sector, visible both in the US and in Europe, is bringing back the ghost of the past financial crises and in particular that of 2008. For many reasons, however, the situation is very different today, with banks that are much better capitalised and whose most risky activities have almost disappeared from their balance sheets. We have published a note on this subject, detailing the reasons for the failures of the US regional banks and Credit Suisse (even if the latter is not officially a failure) and the specific nature of these credit events.

Although the setbacks of these banks are not directly linked to the rate hikes orchestrated by the central banks over the last few months, these institutions are nevertheless the first victims of the very tight credit conditions we are witnessing.

The increased severity of credit conditions is illustrated below by the Fed's Senior Loan Officer Survey and shows the very strong correlation between this indicator and the probability of a recession in the US.