The big European banks register another day of bulging falls in the stock market dragged down by the decline of more than 10% of Deutsche Bank after announcing to repay subordinated debt before maturity.
At 12:30 p.m., the titles of the German entity lost 13.3%, the largest drop among the large European banks, and Commerzbank, also German, dropped 8.4%.
Deutsche Bank’s stock plunged after the bank announced it plans to write down $1.5 billion of subordinated debt on May 24, before it matures in 2028.
The bank assured that it has “all the required regulatory approvals” for that decision, but this caused a deep impact in the banking sectorwhich went into the red after meeting.
At the same time, the shares of the Italians Intesa and Unicredit lose 3.77% and 4.79%, respectively, those of Nordea (Norway), 9.7%; and those of the Dutch ING, 4.7%.
BNP Paribas and Société Générale, both from France, fell 6.7% and 8%.
In Spain, the two big ones, Santander and BBVA, fell 4.8% and 5%, respectively; CaixaBank, 3.7%; Sabadell, 6.8%; Bankinter, 5.5%; and Unicaja, 5.4%.
Some media point out that since last night the indicators on the Deutsche Bank subordinated debt default riskthe so-called CDS (credit default swap).
As explained by the manager IG, a CDS is a financial contract similar to insurance with which investors pay a premium to an entity that, in the event of non-payment of the insured bond, will pay the amount agreed in the contract.
The bankruptcy of Silicon Valley Bank (SVB) and the fall of Credit Suisse have introduced uncertainty in the stock markets about the financial sector and have generated a loss of confidence in the banks “more than a banking crisis”, it points out in a market report the director of investments of the Mutualidad de la Abogacía, Pedro del Pozo.
No reason to be worried: Scholz
The German Chancellor, Olaf Scholz, assured this Friday that “there is no reason to be concerned” about the situation of Deutsche Bank, whose shares fell more than 14% on the stock market today.
Deutsche Bank “is a very profitable bank. There’s no reason to be worried“, said Scholz at the end of the summit that the European leaders concluded today in Brussels, where they analyzed the situation of the financial markets.
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