Shares in Germany’s Deutsche Bank took a plunge Friday with investors fearful after recent bank crises.
Deutsche Bank shares slid by as much as 14.5 percent on Friday and closed at more than eight percent lower, according to CNN. Friday marked the third day in a row that Germany’s biggest bank fell more than 12 percent after a sharp rise in the cost of insuring its bonds against the risk of default, Reuters reported.
“Deutsche Bank is under pressure now. People are repositioning, unloading weak links. People want to avoid anything that could come under focus,” Neuberger Berman’s Jon Jonsson told The Wall Street Journal. Jonsson suggested that there is “no immediate concern on Deutsche Bank,” but noted the bank’s longstanding struggle with profitability.
Meanwhile, German Chancellor Olaf Scholz reassured reporters Friday that there is “no reason to be concerned” about Deutsche Bank. “It’s a very profitable bank,” Scholz said.
Good Morning Everyone! Another day, another bank in trouble. Deutsche Bank is down 14% today. Their credit default swaps are surging. This means the cost to insure bond holders against a default is rising rapidly. Not good.
Deutsche Bank is the largest bank in Germany and a top… pic.twitter.com/J1YLcNnqoo
— Genevieve Roch-Decter, CFA (@GRDecter) March 24, 2023
Losses were reported across Europe’s banking sector, with shares in UBS and Credit Suisse dropping by 3.6 percent and 5.2 percent respectively, the outlet noted. Shares in the UK’s Standard Chartered also fell by more than six percent, according to BBC. (RELATED: ‘Material Weaknesses’: Shares Of Credit Suisse Plunge To Near-Record Low)
The tumble in Europe’s banking stocks follows Swiss bank UBS’ emergency takeover of Credit Suisse last week and the collapse of two major U.S. banks earlier in March. The government-assisted merger was aimed to prevent Credit Suisse’s collapse after stock prices dropped suddenly despite a $54 billion bailout by the Swiss National Bank.
Leaders across the European Union rushed to reassure investors, with EU leaders citing regulatory reforms in the wake of the 2008 global financial crisis as reason for the eurozone’s surety, Reuters noted. “Our banking sector is resilient, with strong capital and liquidity positions,” EU leaders said Friday in a joint statement cited by Reuters.