Banking sector slumps again after brief recovery
FRANKFURT (dpa-AFX) – After an attempt to stabilize in early trading, shares from the European banking sector came under pressure again on Monday. The sectoral index fell 4.3 percent to the lowest level since mid-January. In the German market, Deutsche Bank lost 5.6 percent and Commerzbank up to 11 percent. Investors preferred safe-haven assets, and German federal bond prices rose sharply again on Monday.
Optimism in the market about securing customer deposits in the collapsed venture capital bank Silicon Valley Bank (SVB) is limited, wrote strategist Juergen Molnar of broker Robomarkets. Risks from high book losses in the banks’ bond portfolios remained and should occupy the stock market for quite some time.
First the failure of Silvergate Capital, now SVB Financial, wrote analyst Jochen Stanzl of CMC Markets. The overnight bailout of SVB brings back bad memories of the 2008 financial crisis, he said, adding that the US government is trying to isolate the crisis and avoid toxic contagion. But it is far from certain whether this will work, he said. “The market suspects that the problems that have become evident in SVB are also found on other balance sheets, including those of the very large players.”/bek/mis