The German bank was in the crosshairs of investors due to the bank’s long history of problems and restructuring.
After the collapse of several banks in the United States (Silicon Valley Bank and Signature Bank) and the credit suisse bailoutthe financial markets set their sights on the Deutsche Bankthe largest bank in Germany.
Germany’s Deutsche Bank slumped as the cost of insuring its debt against default risk rose to its highest level in four years. The pan-European STOXX 600 index lost 1.4% but still ended the week higher.
“After what happened with Credit Suisse last weekend, investors don’t want to hold on to positions that have raised concerns, so getting out of such positions is probably what we’re seeing with Deutsche Bank,” said Paul van der Westhuizen, ” And, of course, there is money to be made by being on the right side of a stock overreaction.”
Deutsche Bank slumped 8.5%, after a sharp rise in the cost of insurance against default risk. The German heavyweight said it would call down $1.5bn of Tier 2 bonds due 2028.
“Deutsche Bank took Credit Suisse’s place as the next weakest link in the chain, possibly unfairly,” said David Goebel of Evelyn Partners.
Shares of UBS Group AG and Credit Suisse AG fell 3.6% and 5.2%respectively, after Bloomberg News reported that they were among banks investigated by the US Justice Department for whether financial professionals helped Russian oligarchs evade sanctions.
European banks fell 3.8%, ending their third week of declinesafter the bankruptcy of US mid-market banks and the turbulence at Credit Suisse highlighted the growing risks for the sector following the tightening of financial conditions.
Austrian bank Raiffeisen Bank International lost 7.9% after Reuters reported that the European Central Bank was pressuring the bank to divest its highly profitable business in Russia.
Source: Ambito
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