From Mr Haakon Boenes.

Sir, The most common cause of instability in the banking sector is the perception of asset quality problems. It therefore pains me to observe a public debate that focuses on the symptoms of instability, namely funding challenges and lack of capital. I have worked for 14 years as a banks analyst inside investment banks ranging from the largest such as JPMorgan and Credit Suisse to the smallest such as Pareto Securities, where I am a partner at present. Over the years I have seen several banks struggling to attract investors, be it equity or debt. Every time the fundamental problem has been lack of confidence in the quality of the institution’s assets. Such uncertainty has swelled as investors have sought reassurance in the banks’ financial reports and realised that there is none to be found. The crudeness of the information available is such that no reasonable margin of error can put their minds at ease. Instead, the rumour mill and anecdotes take over and it is all downhill from there. It is a classic lemon problem; asymmetric information between buyer and seller.