European stock exchanges in the storm again. And the fault always lies with the banks: among the most targeted by the financial day is the German giant Deutsche Bank, whose stock lost 15% on Friday morning. The crash of the largest German bank and one of the largest in the Old Continent has obviously conditioned the entire European banking sector and the change in price lists, already tested by the Credit Suisse crisis, by the bankruptcy of the Californian bank Svb and by First Republic, another institution American near the crash (here the performance of the stock market in real time). The bank index Euro Stoxx 600, which contains the continent’s largest lenders, fell 4.6% by mid-morning, overcoming the weakness of the general national indices.
The words of Lagarde and Scholz at the Eurosummit
At the Eurosummit, the president of the ECB, Christine Lagarde, reassured the leaders: “The banking sector in the euro area is resilient because it has solid positions in terms of capital and liquidity”. Lagarde’s warning therefore remains “progress in completing the banking union”. German Chancellor Olaf Scholz then defined the EU banking system as “robust and secure”, underlining the fact that it possesses “the necessary control structures”.
The data and Piazza Affari
Milan (-2.3%), Madrid (-2.6%), Frankfurt (-1.8%) and Paris (-1.8%), London (-1.3%) and Zurich (-1 .25%). Yields on Eurozone government bonds fell sharply on the bond market: the 10-year Bund fell to 2.02% (-21 basis points) and the 10-year BTP to 3.94% (-14 bp), with the spread at 192 points (here the trend of the spread in real time). As expected in Piazza Affari, the banking sector fueled the sales, which reported heavy losses, in line with the titles of the European lists. Bper Banca drops 5.21%, followed by Banco Bpm at -5.1%, while Banca Monte Paschi Siena falls by 5.09%.
The collapse of Deutsche Bank and fears for European banks
Black Friday for European banking stocks is linked to the collapse of Deutsche Bank, which sinks up to 15% on the stock market before recovering -10% to 8.06 euros. Germany’s Commerzbank lost 9%, while France’s Société Générale lost 7% and Finland’s Nordea lost 9.8%. After the eruption of tensions in US regional banks and the hasty takeover of Credit Suisse by its rival UBS last weekend, there is still concern about the financial blowback that banks could suffer from aggressive interest rate hikes put in place. field by central banks. “There is still a nagging question among market participants as to whether the turmoil in the banking sector is over or if there will be wider contagion,” he told the Financial Times Mobeen Tahir, director of macroeconomic research and tactical solutions at WisdomTree Europe. Deutsche Bank, in particular, pays the increased cost of insurance to protect itself against debt default (so-called «credit default swap», a derivative that acts like insurance and pays if a company defaults on its payments and which is considered an index of the solidity of a bank). All it took was a spike in the prices of the bank’s five-year credit default swap, which rose from 134 basis points on Wednesday to 198 basis points on Friday, to knock the bank’s shares on the Frankfurt stock exchange.
The moves of the central banks
After the Fed’s hike only on Wednesday, however, it is clear that the Fed and the ECB will not put a stop to their monetary policy actions. And this sends nervousness to the markets. The Fed proceeded with an interest rate hike by 0.25 percentage points on Wednesday and the Bank of England also raised its key rate by 0.25 percentage points on Thursday. The Swiss National Bank raised interest rates by 0.5 percentage point on Thursday despite being a major theater of banking panic over the collapse of Credit Suisse and its forced takeover by rival UBS. Last week the ECB raised rates by 0.5 percentage points.