after the fall of the bank on the stock market, analysts and managers want to be reassuring

Who’s next ? It was this cruel game that the markets seemed to be playing on Friday, March 24, with the European banks. As if, less than a week after the rescue in extremis of Credit Suisse, the fall of the second Swiss bank did not mark the end of a crisis “idiosyncratic”to use the preferred term of analysts, that is to say strictly linked to the group’s own situation, but “systemic”therefore extended to the entire sector.

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In this game, the main loser of the day is called Deutsche Bank: the first bank in Germany lost, on Friday, up to 15% in session to end down 8.5%. And like Credit Suisse a week earlier, it brought in its wake almost all the big names in the sector: its compatriot Commerzbank gave up 5.5%, UBS, designated acquirer of Credit Suisse, 3.6%, BNP Paribas 5.3% and Societe Generale 6.1%. The sector index fell 4.6%, the lowest since the end of December 2022.

At the origin of this new slide is the surge in CDS (credit default swaps), financial instruments used to hedge against the risk of payment default by an issuer. Those of several European credit institutions rose sharply on Thursday. For the German bank, the cost of this guarantee has practically doubled in two weeks.

This rise in CDS, beyond its speculative aspect, reflects the fact that some investors find the hypothesis that a bank may not repay at least part of its loans more and more credible. And as in other crises in recent years, it first affected players considered to be the “weak links” in the sector.

A healthy bank

But Deutsche Bank, even if it generated more than 5.6 billion euros in taxable profit in 2022, its best result for fifteen years, comes out of a period of costly restructuring made necessary by years of scandals linked to excesses of its investment banking arm.

Is this restoration of order too recent to assure the bank of the confidence of the markets, in a tense context? Analysts were perplexed on Friday on the exact cause of the stock market panic around the establishment. Because they agree that despite its past, Deutsche Bank is today much stronger than Credit Suisse.

The bank is in ” good health “judged the research firm Autonomous, in a report published on Friday. “We have no concerns about the viability of Deutsche Bank or its assets. To be absolutely clear, Deutsche is not the next Credit Suisse. »

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