European stocks recorded the worst week in 5 months due to the volatility of the banking system
European shares gave up early gains on Friday, posting their biggest weekly decline in five months, following supportive measures by regulators in the United States and Europe failed to calm fears of a global banking crisis.
The Stoxx 600 European stock index ended the day’s trading down 1.3%, affected by the decline in the sub-indices of the banking, insurance and financial services sectors.
The banking sector index lost 2.6%, with shares of HSBC, BNP Paribas, Allianz and UBS Group falling between 1% and 3%.
The STOXX 600 index lost regarding 4% this week, with bank shares falling 11.5%, following the collapse of US and European banks raised investor concerns regarding the financial sector situation.
Despite its agreement to obtain a rescue package from the Swiss National Bank (Central) in an amount exceeding $54 billion, Credit Suisse’s share declined today, Friday, by more than 8%, following rising in the previous session with the announcement of the agreement, which led to a decline in share prices of most institutions. European Finance.
The intervention this week by Swiss authorities, who also confirmed that Credit Suisse has met the capital and liquidity requirements imposed on “systemically important banks”, sent the bank’s stock up more than 18% on Thursday following closing at an all-time low on Wednesday.
This week, the cost of insuring Swiss bank loans rose to regarding 3,800 basis points (38%), according to CNBC news channel, following the head of the National Bank of Saudi Arabia announced the inability of his bank, the Swiss bank’s largest shareholder, to buy additional quantities of gold. Bank shares, due to internal regulatory actions.
Credit Suisse offered to buy back regarding 3 billion francs worth of debt, in respect of 10 large US dollar debt securities and four large euro denominated notes.
The Swiss bank is undergoing a massive strategic overhaul, aimed at restoring stability and profitability following a series of losses and accounting scandals.
However, it seems that the capital markets and stakeholders are not convinced, as evidenced by the decline in the bank’s share price, and the occurrence of a “significant exit” from the assets under management of the bank, as it lost regarding 38% of its deposits in the last quarter of 2022.
(Archyde.com, The New Arab)
