Banks Seen as Safer as AI Bubble Emerges as Global Market Risk

November 2, 2026 admin 0 Comments AI bubble, AI finance, AI Risk, banking risk, Banking Sector, FINANCIAL STABILITY, investment risk, Julius Baer, off-balance-sheet risk, private credit, Stefan Bollinger, systemic risk

The risk of a new global financial crisis emerging from the banking sector is currently considered low, while the rapid expansion of artificial intelligence investment is emerging as a potential source of market stress, according to Julius Baer CEO Stefan Bollinger.

Bollinger said banks are in a relatively strong position and that the possibility of the next crisis originating from a banking failure is “incredibly low”. He instead pointed to off-balance-sheet commitments within the AI ecosystem, where the scale of investment and financial exposures has increased significantly.

The concern is that investors could become excessively optimistic about the commercial potential of AI, creating valuations and financing structures that may not be supported by underlying cash flows. If expectations change sharply, losses could spread beyond technology companies through investors, lenders and other financial institutions.

Bollinger also acknowledged that rising yields could create isolated problems for pension funds, insurers and other financial institutions, similar to stresses seen during previous episodes of rapid interest-rate increases. However, he does not currently view such risks as systemic.

The comments come as wealthy Indian investors increasingly diversify internationally. Bollinger said offshore investments among wealthy Indian clients have increased from around 2–5% of their wealth to 15–20% over the past five years.

He also noted growing interest in hedge funds, private equity, private credit and structured products as investors look beyond traditional US-market exposure.

For banks and risk managers, the comments highlight an important emerging risk: AI-related exposures may not remain confined to technology companies. Lending commitments, private credit, structured finance, investment portfolios and off-balance-sheet exposures could create interconnected risks if the AI investment cycle experiences a sharp correction.