Another day of panic in the stock markets because of the banks. The entities are solvent according to the data they present, but the truth is that investors do not quite believe it. The focus of world stock markets, which in recent weeks was focused on two American banks and the European Credit Suisse, moved yesterday to Germany, where Deutsche Bank’s shares fell by 14% . The German giant closed the session with losses of 8.5%.
Despite the oxygen balloon of the German chancellor, Olaf Scholz, who had to come out in defense of Deustche Bank, the domino effect was fulfilled perfectly. The German bank dragged banking stocks down (BBVA and Sabadell fell more than 4%), which pushed the indices: the Ibex fell 1.9%, and the German Dax, 1.7%. The rest of the big Spanish banks also experienced drops: Santander by 3%, and CaixaBank, by 2.9%. Commerzbank lost 5.5% and in France, Société Générale was down 6.1%, and BNP Paribas, 5.3%. In a similar vein to that of Scholz, French President Emmanuel Macron stated that the fundamentals of European banks are sound.
None of this was enough to prevent Deutsche Bank shares from falling yesterday for the third consecutive day. One reason is that there was an increase in bank credit guarantee insurance, known as CDS, which means investors have less confidence in the German bank’s ability to pay back its debts. Jaume Puig, general manager of GVC Gaesco Gestión, insisted that the loss occurs “following the speculations of the CDS”. The manager added that “there is a speculative part of the market that wants to continue pulling the strings on this issue, but the truth is that it does not give more of itself”. Antonio Castelo, an analyst at iBroker, assured that when the market targets a bank, “it doesn’t matter if it’s solvency or not, they can collapse it”.
Deutsche Bank said on Friday it would repay $1.5 billion of Tier 2 bonds due in 2028, after issuing debt to replace them in February, Reuters reports. It didn’t help dampen spirits either.
With each passing day, analysts emerge who believe that the ECB’s response to the financial storm is a little lukewarm. “So far, the tactic of the central banks, especially the ECB, is to not give it much importance so that they don’t seem to be worried. But the market doesn’t care if they’re not worried, the market already worries itself”, according to Víctor Alvargonzález, director of strategy and founding partner of the independent advisory firm Nextep Finance.
For now, the only thing the ECB has done is put its short- and medium-term roadmap on hold after raising interest rates last week. The Euribor in its daily rate was 3.5% yesterday, and the rates are also 3.5%. This level of Euribor (rate at which banks lend money) shows that these entities believe that there may not be any more interest rate hikes.
The falls in European bank stocks followed Thursday’s losses in the United States, where investors were waiting to see how far authorities would go to shore up the sector, particularly fragile regional banks. On the other hand, yesterday the American index started to rise, which was able to partially cushion the falls.
The rescue of Credit Suisse, bought by its rival UBS, has not stopped the bleeding on the bank. Although Spanish entities have 157,000 million in capital resources to guarantee their solvency and bankers – like this week Josep Oliu, from Sabadell – claim that they are healthy, there is something that makes investors suspicious. In fact, more than half a month has passed since a small bank in the United States put the world on alert. We’ll see how long the panic lasts.
