The share prices of the European banks recovered somewhat on Tuesday.
The day before, investors had sold bank stocks in droves.
UBS, Deutsche Bank, BNP Paribas, they all lost a lot.
The spirit of Evergrande blows in the markets.
Since the shaky Chinese real estate company is suddenly in the public eye, uncertainty has spread.
Martin Hock
Editor in business.
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Inken Schönauer
Editor in business, responsible for the financial market.
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It is true that it is repeatedly emphasized that the Chinese company operates in a very isolated market and has little connection with other countries - especially not with European banks.
But it is uncertain whether there will be complete transparency.
When asked about a possible participation of European banks in the Evergrande debt mountain, the institutes said that they would not comment on specific customer relationships or would generally not comment on them.
BaFin, Bundesbank and also the European banking supervisory authority responded to inquiries.
"We're not commenting on that."
Difficult forecasts
The fact that the uncertainty is spreading anyway, or precisely because of it, has to do with Lehman Brothers - the investment bank that wobbled for a long time in 2008 and then went bankrupt. The result was a conflagration, the effects of which the financial industry is still feeling today, because afterwards regulation was tightened significantly. In the Corona crisis, the protective mechanisms came into focus. So far, however, it has been more traditional industrial companies like Lufthansa that one had to worry about. Deutsche Bank boss Christian Sewing had said at the beginning of the crisis that this time the banks would be part of the solution and not part of the problem.
Evergrande and Lehman Brothers. Is the comparison permissible, or are apples and pears being compared? It is not yet possible to say whether the Chinese group has the potential to become a Lehman Brothers of the Far East. Too much is unclear for that. So you don't even know how much debt Evergrande actually is, because a large part of the debt is not accounted for. In contrast to Lehman, the group is a conglomerate that also holds non-financial assets, but their value is also difficult to assess. The true state of the Chinese real estate industry is just as uncertain. During the financial crisis, for example, the Spanish real estate market was also considered solid for a long time before it became clear that building had been massively over-demanded - with corresponding consequences.
The case of Lehman Brothers was also accompanied by misjudgments and unknowns, although the reasons for the bankruptcy are quickly summarized. At that time the American real estate market was booming, driven by an escalating loan securitization, which enabled banks and mortgage brokers to outsource their risks to investors and thus to grant more and above all risky loans - real estate loans to debtors, which were referred to as "ninjas": No income, no job, no assets (no income, no work, no assets). Lehman turned a big wheel here: in 2007, the bank guaranteed more mortgage-backed securities than any other financial company. At $ 85 billion, the portfolio was four times the size of the bank's market capitalization. That looked good: In 2007 the net profit was 4,$ 2 billion on revenue of $ 19.3 billion.
But the foundation had long since crumbled. At the beginning of 2007, the default rates of bad mortgage loans (subprimes) had risen to a record high. When two hedge funds owned by competitor Bear Stearns collapsed in June, the situation at Lehman also came to the fore. In July, a company spokeswoman rejected speculation that the bank should face higher losses from its subprime business. And although the bank still wanted to hire staff in June, it announced in August that it would cut 1,200 jobs.