Rowan notes the 2008 crisis permanently shifted lending activities from banks to nonbank lenders like Apollo.
“You know, the financial crisis in two thousand and eight pushed a lot of activities out of the banking sector and into the nonbank lending sector.”
Rowan cites banking market share by region and targets gaining just one percentage point in Asia as success.
“So I've told my partner Matt Mickalini who runs this business your job is to get market share in Asia from 90 to 89.”
Rowan sees enormous opportunity in Asia where banks represent 90% of corporate capital versus 25% in the US.
“The banking system is 25% of all corporate capital. In Europe it's 65%. In Asia I think it's 90%.”
Rowan notes $42 billion left SVB in four hours, challenging regional bank CEOs' business models.
“42,000,000,000 left SVB in four hours without a line. So you're now the CEO of a big regional bank.”
Rowan predicts regional banking business models will fundamentally transform within five years.
“I'll be shocked if five years from now the business model of a regional bank looks like what they do today.”
Rowan says the banking system is in the best shape he has seen in his 42-year career.
“I think it's in the best shape I've ever seen it in my forty two years of professional career.”
Rowan argues risky lending belongs in investment markets, not government-backed banking systems.
“I always ask the provocative question, if what the activity is risky, do we want it in the government backed, government guaranteed banking system, or do we want it in the investment marketplace?”
Rowan explains banks excel at short-term lending while Apollo excels at long-term lending backed by retirement liabilities.
“And if you think about people like us, we borrow really long because we back retirement liabilities. And institutions, pension funds, endowments, sovereign wealth funds, they borrow really long.”