NEW YORK, March 25— Shares of Germany’s largest bank Deutsche Bank plunged yesterday as investors fretted that regulators and central banks have yet to contain the worst shock...
NEW YORK, March 25— Shares of Germany’s largest bank Deutsche Bank plunged yesterday as investors fretted that regulators and central banks have yet to contain the worst shock to the sector since the 2008 global financial crisis.
The meeting was chaired by US Treasury Secretary Janet Yellen, whose comments are being closely watched by markets for an indication of how far authorities are willing to go to shore up the banking sector after the collapse of Silicon Valley Bank and Signature Bank earlier this month. “It takes time. It’s going to have to be weeks without any problems in the banking system before markets will be convinced that it’s not a systemic problem.”
Paul van der Westhuizen, senior strategist at Rabobank, cited Deutsche’s profitability as the “fundamental difference” between the two European banks, given Credit Suisse did not have a profitable outlook for 2023.Still, shares in Germany’s largest bank have lost a fifth of their value so far this month and the cost of its five-year credit default swaps — a form of insurance for bondholders — jumped to a four-year high on Friday, based on data from S&P Market Intelligence.
As part of the deal with UBS, the Swiss regulator determined that Credit Suisse’s AT1 bonds with a notional value of US$17 billion would be wiped out, stunning global credit markets. In a bid to show it has ample capital while keeping funding costs in check, Italy’s UniCredit CRDI.MI is leaning towards repaying a perpetual bond at the earliest opportunity in June, a source close to the matter told Reuters. A spokesperson for UniCredit declined to comment.
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