European stock exchanges are in for a storm again. And the fault always lies with the banks: Among the most targeted groups in the financial day is the German giant Deutsche Bank, whose shares lost 15% on Friday morning. Obviously, the collapse of the largest German bank and one of the largest in the old continent affected the entire European banking sector and the change in price lists, already tested by the Credit Suisse crisis, the bankruptcy of California Svb and by the First Republic, another American institution near collapse (Here is the performance of the stock exchange in real time). bank index The Euro Stoxx 600, which contains the continent’s largest lenders, was down 4.6% by mid-morning, Overcoming weaknesses in general national indicators.

The words of Lagarde and Schultz at the European summit

At the European Summit, Christine Lagarde, President of the European Central Bank, reassured leaders, saying, “The banking sector in the eurozone is resilient because it has strong positions in terms of capital and liquidity.” Therefore, Lagarde’s warning remains “progress in completing the banking union.” Then German Chancellor Olaf Scholz defined the banking system in the European Union as “strong and safe”, emphasizing the fact that it had “the necessary control structures”.

Data and Avari Square

Milan (-2.3%), Madrid (-2.6%), Frankfurt (-1.8%), Paris (-1.8%), London (-1.3%) and Zurich (-1.25%). Eurozone government bond yields fell sharply in the bond market: the 10-year note fell to 2.02% (-21 basis points) and the 10-year BTP to 3.94% (-14 basis points), with a spread at 192 points (Here is the trend of the spread in real time). As expected in Piazza Avari, the banking sector boosted sales, which posted huge losses, in line with European listing titles. Bper Banca fell by 5.21%, followed by Banco Bpm by -5.1%, while Banca Monte Paschi Siena fell by 5.09%.

The collapse of Deutsche Bank and fears for European banks

Black Friday for European bank stocks is linked to the collapse of Deutsche Bank, which plunged as much as 15% in the stock market before recovering -10% to €8.06. Germany’s Commerzbank lost 9%, France’s Societe Generale lost 7% and Finland’s Nordea Bank lost 9.8%. After tensions erupted in US regional banks and the hasty takeover of Credit Suisse by rival UBS last weekend, there remains concern about the financial blowback that banks could suffer from aggressive rate increases set in by central banks. “There remains a nagging question among market participants as to whether the turmoil in the banking sector is over or whether there will be a broader contagion,” he said. financial times Moopen 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 (the so-called “credit default swap”, a derivative that works like insurance and pays out if the company defaults on its payments which is considered an indicator of the solidity of the bank ). All it took was a surge in the bank’s five-year CDS prices, 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.

Central bank movements

Moreover, after only raising the Fed on Wednesday, it is clear that the Fed and the European Central Bank are not going to stop monetary policy actions. This causes concern in the markets. The Federal Reserve proceeded to raise interest rates by 0.25 percentage points on Wednesday, and the Bank of England raised its main interest 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 scene of a bank panic due to the collapse of Credit Suisse and a forced takeover by rival UBS. Last week, the European Central Bank raised interest rates by 0.5 percentage point.