European banks face global meltdown as high rates hammer home reality | – #European #banks #face #global #meltdown #high #rates #hammer #home #reality
LONDON/FRANKFURT, 10 March (Reuters) – Amid growing concerns about the sector’s vulnerability to currency appreciation USA bank after a sharp drop in its shares Europe Bank shares fell on Friday.
Bank causing a global loss in stocks USA the core of the technological sector bank 1.8 by selling its partner Silicon Valley Bank’s bond package to meet depositors’ cash demands billion dollars It was caused by having to raise new capital after losing.
Markets.com’s Chief Market Analyst, Neil Wilson, of the episode rising interest rates and fragile USA said it could be the “straw that breaks the camel’s back” for banks after concerns about the economy.
Europe’s STOXX bank index ( .SX7P ) fell more than 4% and was set for its biggest one-day slide since early June, with most major lenders down 4.5%, including HSBC ( HSBA.L ) and Deutsche Bank ( DBKGn .DE), decreased by 7.9%.
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Shares in Italy’s UniCredit ( CRDI.MI ) and Intesa Sanpaolo ( ISP.MI ) also fell sharply.
Although many analysts do not see a systemic threat to the global banking system, higher central bank The negative effects of interest rates on lenders are now being felt.
“The problem is the leverage in the system,” said James Athey, Abrdn’s chief investment officer. “Monetary policy has been too easy for too long.”
The Federal Reserve cut US interest rates 450 basis points near zero, Europe And with the Central Bank increasing the Euro zone by 300 points, global borrowing costs increased at the fastest rate in recent decades.
Other parts of Europe and many emerging economies have done more. However, there are concerns that price inflation will remain high, which will further increase interest rates.
The crisis in SVB, many since the global financial crisis more than a decade ago tax trillions of payers dollars stressed the sensitivity of banks supported by money.
John Cronin, an analyst at Goodbody, said investors were worried about the value of banks’ investments falling and how that would affect the capital that backs their businesses, as well as depositors switching banks for a better deal.
Banks typically invest heavily in government bonds, particularly those of their own countries, making these bonds vulnerable to declines in their value.
Reuters Graphics Writing by John O’Donnell; Supplement by Jo Mason and Marc Jones report; Edited by Elisa Martinuzzi and Toby Chopra
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2023-03-10 14:53:32
Source – reuters
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