Despite the collapse of three large banks last year, many smaller banks remain vulnerable due to high exposure to commercial real estate and rising interest rates, which have driven down bond and loan values. Regulators have ordered some banks to address capital and staffing issues. Merger activity has slowed due to uncertainty around regulatory approvals and the impact of portfolio markdowns on capital levels. However, industry experts expect an increase in mergers this year as bank executives recognize the need to consolidate and older leaders consider retirement.
Turkey's central bank is tightening monetary policy to curb inflation. It has ordered banks to place portions of their lira reserves in blocked accounts, increasing loan rates and reducing loan limits. Some banks have stopped lending or recalled loans, leading to a liquidity squeeze. The move comes despite the bank's previous indication that its rate-hiking cycle was over, but rising inflation and falling reserves have prompted a reassessment.
Baylor University, despite its smaller size, has outperformed Ivy League endowments with a substantial 6.4% return on its $2 billion endowment. The university's team, led by David Morehead, leverages market disruptions to optimize allocations. They invest strategically in emerging industries such as helium (for chip manufacturing and space exploration), biotech, and small caps, aiming to secure future returns.
