The large European banks recorded another day of bulging falls on the stock market dragged down by the decline of more than 10% of the Deutsche Bank after announcing that it was repaying subordinated debt before its maturity.
At 11:30 GMT, the titles of the German entity lost 13.3%, the largest drop among the large European banks, and the also German Commerzbank left 8.4%.
Deutsche Bank’s stock plunged after the bank announced it plans to write down $1.5 billion of subordinated debt on May 24, before it matures in 2028.
The bank assured that it has “all the required regulatory approvals” for this decision, but it caused a deep impact in the banking sector, which went into the red after it was known.
At the same time, the shares of the Italians Intesa and Unicredit lost 3.77% and 4.79%, respectively, those of Nordea (Norway), 9.7%; and those of the Dutch ING, 4.7%. BNP Paribas and Société Générale, both from France, fall 6.7% and 8%.
In Spain, the two big ones, Santander and BBVA, fell 4.8% and 5%, respectively; CaixaBank, 3.7%; Sabadell, 6.8%; Bankinter, 5.5%; and Unicaja, 5.4%.
Some media point out that since last night the indicators on the risk of non-payment of Deutsche Bank’s subordinated debt, the so-called CDS (credit default swap), have risen sharply.
As explained by the manager IG, a CDS is a financial contract similar to insurance with which investors pay a premium to an entity that, in the event of non-payment of the insured bond, will pay the amount agreed in the contract.
Source: Larepublica
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