In the end it was almost fine. As the day had opened, the final declines in European bank stocks I am little. The one most under pressure, german bank, had come to lose 14% but then closed at minus 4%. Rival Commerzbank fell 3.8%. I credit default swap on Deutsche Bank, i.e. financial products that make it possible to insure against the possible bankruptcy of a company, often used for purely speculative purposes, however, rose significantly. The cost of 5-year CDS has reached 220 basis points, from 134 on Wednesday. All European competitors fell in the wake of Germany’s main bank. In Paris Societe Generale lost 6.1%, BNP Paribas it 5.3%. In Milan Intesa Sanpaolo leaves more than 2.4% on the ground, Unicredit 4% as well as Banco Bpm and Bper. The Swiss Ubs it lost 3.7%.
In an effort to calm the markets Deutsche Bank announced that will repay a subordinated bond early. However, the sortie seems to have had the opposite effect. In general, the concerns mainly concern the risks associated with subordinate bond AT1after the Swiss authorities decided to zero its value in priority over shares under therescue operationoe sale to Ubs of Swiss credit. Some of Deutsche Bank’s bonds of this type have sold off strongly in recent days causing their price to fall and raising their yield by up to 23%.
“The EU banking system is robust and safe” and has “the necessary control structures”, said the German chancellor Olaf Scholz in the late morning, faced with the collapse of securities of German institutes, adding that “Deutsche Bank it is a very profitable bank, there is no reason to worry”. In fact, the indicators on the capital solidity of the German bank are in order, technicallyand the Cet1 ratio, i.e. the share of “valuable” capital in relation to assets was 13.4% at the end of 2022, just as the data on liquidity was good. They are important and reliable guarantees but not absolute.
“The European Central Bank closely follows the events of the market and is ready to intervene if necessary.” This, in summary, the insurance provided by Christine Lagarde to the European leaders who attended the EU Council today. According to the ECB, market volatility it could still last but European credit institutions have strong resistance and liquidity and this must be considered as an element of strength with respect to speculative movements. US bank analysts Citigroup they write that what we are witnessing is “An Irrational Market”. The experts add: “The risk is that there is a psychological impact of the titles of newspapers and media on saverswhether the fears are correct or not.”
In this scenario, the ongoing debate within Unicredit for an increase in the bonuses and salaries of the already highly paid CEO really seems a bit surreal Andrea Orcel who urged an upward revision of his compensation. “Orcel’s salary compared to the international and national economic situation is excessive. Orcel didn’t work badly, he worked well, he produced results, at least he corrected in depth the mistakes that Mustier made. I don’t know if he will stay, it will be his decision, within UniCredit for the next few years ”, said today the secretary general of Fabi (the main banking union, ndr), Lando Maria Sileoni.