- Banking ECB meets urgently to analyse vulnerabilities in European banks
Many were quick to put an end to the banking storm of recent days after the meeting of the European Central Bank (ECB) and the rescue announcements of Credit Suisse and the US First Republic Bank, however, all have turned out to be a failed antidote that, far from calming panic, have reactivated market doubts about global financial stability.
The banks thus end a black week in the stock market that is settled with millionaire losses in their valuations and, what is almost as serious, with a crisis of confidence that threatens to extend in the coming sessions. Neither the financial firewall created by the US Federal Reserve, nor Joe Biden's call for calm, nor the liquidity offered by the Swiss National Bank to the battered Credit Suisse, nor the message of the ECB after its meeting in Frankfurt nor the rescue of First Republic on Friday have appeased the fears of the markets. Nothing seems to be enough since last Friday the collapse of Silicon Valley Bank (SVB) was confirmed and the storm began.
Investors have since fled massively from major banks. "It's a sign of declining confidence amid uncertainty about who will be next to require help. Authorities are still working to contain the bleeding and more band-aids may be needed to shore up confidence," said Craig Erlam, an analyst at investment firm Oanda.
In Spain, the entities present in the Ibex 35 have not escaped punishment and in this last week 26,843 million euros of their stock market value have been left by the wayside. The punishment has been especially primed with Banco Sabadell, which has reduced its capitalization by almost a quarter (24.5%) in the last seven days, to 5,529 million euros. Only this Friday, its titles have fallen by 3.14% and move away from the level of the euro (0.983 euros). Santander has also suffered a corrective of 4.65% in the last session, while BBVA has fallen by 3.5%. Bankinter has lost 2.5%; CaixaBank, 3.5% and Unicaja, 1.74%.
ECB emergency meeting
The falls have been the tonic since mid-morning when the emergency meeting of the European Central Bank was confirmed in Frankfurt. Until that moment, the banks crossed the session in green, however, the meeting has set off the alarms. Just a few hours earlier, the ECB itself and its president, Christine Lagarde, had highlighted the strength of the European banking system at the end of the meeting in which they agreed on a new rate hike in the Eurozone. Just hours earlier, Lagarde said: "The euro area banking sector is resilient, with strong capital and liquidity positions. In any case, the ECB's monetary policy toolbox is fully equipped to provide liquidity support to the euro area financial system if needed and to preserve the smooth transmission of monetary policy."
The message, which seemed to throw some reassurance in the markets, has been diluted today, and the same has happened with the rescue of Credit Suisse. The company on Thursday requested a rescue package of 50 billion Swiss francs from the Swiss National Bank, but markets remain unconfident that the bank can straighten out its plight. There are all kinds of speculations about it. Analysts are considering a possible split to separate the unit that manages its operations for the Swiss market, the one that is currently doing best in the bank.
Another possibility would be the separation of the wealth management unit and its transfer to UBS, a direct competitor of Credit Suisse and Switzerland's first bank by market value, while the asset management unit and its investment bank – the one that has given the greatest problems – could be separated from the entity or dissolved. according to the Financial Times. Waiting for what may finally happen, its shares have lost 8% today.
Its rescue could end up being as failed as that of the First Republic Bank in the US. The shares of the entity fall this Friday more than 25% on Wall Street despite the lifeline of 30,000 million dollars that a group of private banks threw yesterday to try to stabilize their situation. Investors are suspicious. The bank has already lost 80% of its value since the crisis began and its drift could end up accelerating the end of other entities with a similar profile in the country. That is, after all, the main fear of the markets.
According to The Trust Project criteria
- Credit Suisse
- Silicon Valley Bank