European bank stocks slide on worries over their holdings of bonds

by user

[ad_1]

Shares in European banks slumped on Friday on worries over their health after a series of interest-rate hikes around the world.

The Stoxx Europe 600
SX7P,
-3.94%

banks index dropped over 4%, with shares in Deutsche Bank
DBK,
-7.47%

down 7%, Bank of Ireland
BIRG,
-4.48%

down 6% and HSBC Holdings
HSBA,
-5.15%

falling 5%. On Thursday, the SPDR S&P Regional Banking ETF
KRE,
-8.11%

slumped 8%.

Bank fears have been exacerbated this week by Silvergate Capital
SI,
-42.16%

voluntarily liquidating its banking subsidiary, and Silicon Valley Bank parent SVB Financial
SIVB,
-60.41%

launching a $1.75 billion share sale to plug a hole caused by the sale of a loss-making Treasury securities portfolio.

“This is an issue that could hit all the banks, including the big banks, because the banks amassed a lot of assets since the 2007/2008 financial crisis at rising prices, and they had to pay nearly no compensation for bank deposits, as interest rates have been near zero for such a long time,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Banks that have traditionally borrowed short and lent long are being hurt a deeply inverted yield curve. The 2-year yield
TMUBMUSD02Y,
4.839%

earlier this week was its most inverted against the 10-year yield
TMUBMUSD10Y,
3.852%

since 1981. The German 2-year
TMBMKDE-02Y,
3.154%

yield is also higher than the German 10-year
TMBMKDE-10Y,
2.547%
.

Read: 10 banks that may face trouble in the wake of the SVB Financial Group debacle

[ad_2]

Source link

Related Posts

Leave a Review

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy