After a slightly lower opening, the performance of European stock exchanges worsened. Around 12.30 Milan is down more than 3.5%, driven down by bank stocks, the worst in Europe. The Silicon Valley bank case still casts a shadow (here is a guide on what to do with savings after fears raised by the bankruptcy of Svb), but the sharp rise in financial markets in the Old Continent is due to the exacerbation of the crisis of a major bank in Europe, Crédit Suisse, which collapsed in Zurich by about 20 per cent, having sold up to 22 per cent. As a result, Italian banks are inundated, with Unicredit down -7%, Banco Bpm and Intesa Sanpaolo over 6% and Finecobank down 6%. (Here is the real time trend). All arenas are bad: Paris -3.5%, Frankfurt -2.8%, London -2.3%.
Credit Suisse is down 20%.
The collapse of Credit Suisse is due to the position of the largest shareholder in the National Bank of Saudi Arabia. Its chairman, Ammar Al-Khudairi, announced in an interview with Bloomberg TV that the Saudi bank would not support the bank “absolutely” by increasing its capital. If we exceed 10 percent, a set of new rules will come into play, Al-Khudairi said, “and we are not inclined to enter into a new regulatory regime.”
Credit default swaps are flying
The cost of insuring Credit Suisse’s near-term default bonds is approaching levels that indicate serious investor concern. the Credit default swap (i.e. the bankruptcy insurance rate, the instrument that made headlines during the subprime mortgage crisis in 2008) in one year it was indicated at 835.9 points yesterday at the close, according to Bloomberg reports and is increasing today, near the 1000 mark which indicates a high level of anxiety. The current level corresponds to 18 times the one-year CDS of UBS and about 9 times that of Deutsche Bank.
Waiting for the European Central Bank
Government bond yields have fallen sharply as we look forward to the next meeting of the European Central Bank. The spread between the Btp and the Bund rises to 192 points, with the Italian 10-year yield coming in at 4.18% (-8 basis points). The crisis of the two banks, Svb and Credit Suisse, exploded on the eve of the European Central Bank meeting that will decide to raise the new interest rate. While previously the markets considered an increase of 0.5% (announced by Christine Lagarde) as previously taken for granted, the extent of the increase is now uncertain in light of fears of other banking crises, even if denied by institutional votes, also with regard to the Italian institutes.
Celloni (Fabi): “The Italian banking sector is one of the safest in the world”
“The Italian banking sector is one of the safest in the world. Banks in our country have very high liquidity ratios, equal to 160%, that is, they have additional liquidity, far exceeding the minimum limits established by law and our supervision is always vigilant. I feel like saying that we can rest assured », reassured the General Secretary of Fabi, Lando Maria Cilione, on the morning of the 15th during Radio Anchio’s broadcast on Radio Rai Uno. In any case, the Bank of California crisis is liquidity, not bankruptcy. There was a double problem: bank management and controls. Therefore, it is wrong to create disasters or talk about infection both in the United States and the rest of the world.”
Gross Petro: “Svb case due to insufficient supervision”
“If the cause of an accident, Marginal condition due to ineffective risk management and inadequate oversight. There are other emergencies to worry about: climate change and the war in Ukraine to name a few. These are the real problems, and they require investments in one case, effective policies in the other ». Gian Maria Gros Pietro, Chairman of the Board of Directors of Intesa San Paolo, said in an interview with La Stampa, regarding the collapse of the Silicon Valley bank. The bankruptcy of the bank “is above all the result of a political choice by Donald Trump – as Gross Petrou explains – to raise the minimum set for Banks are not importantBanks are not strictly supervised. Silicon Valley Bank was among them. Therefore, it allowed itself a series of administrative errors that led to the collapse ».
Orcel: “Liquid and well-capitalized banks”
After last year’s consolidation, European banks today are “stronger, well-capitalized and highly liquid,” UniCredit CEO Andrea Orcel said during the Morgan Stanley European Financials Conference 2023. Orcel noted that the old continent’s lenders, Because of negative interest rates I “overcome the moments when the core business was not profitable by focusing on something else”. now, “With higher prices we can see better structural profitability.”. Also in light of what is happening in the US with the bank’s alarm bell due to the Svb issue, Orcel said he is “positive about the EU banking sector despite the uncertainties” that arose first with the war in Ukraine and then with the collapse of the US institutes Silicon Valley Bank and Signature Bank Because the sector is able to confront them. “Europe has always been obsessed with capital.”He explained, referring to the strict rules the European Central Bank has put in place in recent years, which involve increases in capital levels from year to year and constant capital checks.
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