- Shares of Germany’s largest bank collapsed this Friday and concern is growing in the global banking system.
- Due to the forced sale of Credit Suisse, Deutsche Bank’s default insurance rose.
- As a result of this, the shares of the main European banks fell sharply this Friday.
The banking crisis, it seems, is far from over. It is that after the bankruptcy of Silicon Valley Bank and Signature Bank in the United States, and the sale under the pressure of Credit Suisse to UBS, now the eyes fell on Deutsche Bank.
There is a lot of concern in the market as Deutsche Bank is the largest bank in Germany. But what happened? Shares of the financial institution plunged 14% on the Frankfurt Stock Exchange, after the bank’s default insurance loans, which insure against default, soared to four-year highs.
This dragged down other European banks such as Commerzbank (-7%), Societe Generale (-6%) and UBS 5%.
At this time, Deutsche Bank shares accumulate a loss of 23% so far this year and are located at only 8 euros, that is, a minimum of five months.
“Deutsche Bank has been in the spotlight for a while, similar to Credit Suisse. It has gone through several restructurings and leadership changes in an attempt to get back on a solid footing, but so far none of these efforts seem to have really worked. “
Stuart Cole , Chief Macro Economist at Equiti Capital.
To have a dimension of the crisis, the STOXX 600 index of European banks (does not include Credit Suisse or UBS shares) has experienced one of its most volatile weeks of the year, with a fall of 2.1%, which means a monthly decrease of 17%.
Deutsche Bank said it would call down $1.5 billion in a set of Tier 2 bonds due 2028. The bank had already issued similar new notes in February, intended to replace the ones it now calls down, Cole added.
Due to the concern that exists in Europe and the United States regarding the banking crisis, the US Treasury Secretary, Janet Yellen, called an emergency meeting for this Friday with the main financial regulators of the country.
