(News Bulletin 247) – European establishments are falling again, due to the persistence of concerns about the solidity of the system. Deutsche Bank sees the cost of its instrument against the risk of default climbing, French banks are struggling.
The banking sector is clearly not out of the rut in the market. A new wave of panic is blowing across all European institutions, particularly Deutsche Bank, which fell 11.1% in Frankfurt.
As Bloomberg reports, the German establishment sees the cost of “Credit default swaps (CDS)”, instruments for hedging against the risk of default, rise sharply, taking 24 basis points (0.24 percentage points) to reach 1.93%, a sign of investor concern.
In Paris, Societe Generale dropped 7% and BNP Paribas fell 6.22%. This plunges the CAC 40 by more than 2%. In Milan UniCredit loses 5%.
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The fear comes from the United States
“It’s simple: as long as the banking crisis in the United States is not resolved, there will be fears about the stability of the system in Europe and volatility in the sector”, explains David Benamou, director of investments at Axiom Ai. .
“However, for the moment, the American authorities have ruled out setting up a guarantee on all the deposits of American regional banks. It is a politically complicated subject, but they will have to do it”.
The tumble of European banks follows, in fact, a downward movement in the United States, where the Secretary of the Treasury, Janet Yellen, excluded this guarantee on deposits.
Concerning Deutsche Bank, David Benamou, nuances the movement of fear. “CDS are tightening on Deutsche Bank but one wonders if this is not an epiphenomenon”, he judges.
“Before Credit Suisse, it is the example of the establishment which restructured itself heavily but successfully. They generated 6 billion euros in profits last year and are on the same trend this year. Deutsche Bank is overtaken by its recent past but the fundamentals are there, so the crisis should pass”, he concludes.
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