Deutsche Bank became the latest focus of the banking turmoil in Europe as ongoing concern about the industry sent its shares slumping the most in three years and the cost of insuring against default rising.
The bank, which has staged a recovery in recent years after a series of crises, said Friday it will redeem a tier 2 subordinated bond early. Such moves are usually intended to give investors confidence in the strength of the balance sheet, though the share price reaction suggests the message isn’t getting through.
“It is a clear case of the market selling first and asking questions later,” said Paul de la Baume of FlowBank. “There continues to be enormous concern that the banking crisis could merge into a heavier risk-off event in markets.”
Deutsche Bank slumped as much as 15% intraday, the biggest decline since the early days of the pandemic in March 2020, before closing 9% down. It was the worst performer in an index of European bank stocks, which fell as much as 5.7%. Crosstown rival Commerzbank, Spain’s Banco de Sabadell and France’s Societe Generale also saw steep drops. The declines undermine hopes among authorities that the government-brokered rescue of Credit Suisse last weekend would stabilise the broader sector.
The bank, which has staged a recovery in recent years after a series of crises, said Friday it will redeem a tier 2 subordinated bond early. Such moves are usually intended to give investors confidence in the strength of the balance sheet, though the share price reaction suggests the message isn’t getting through.
“It is a clear case of the market selling first and asking questions later,” said Paul de la Baume of FlowBank. “There continues to be enormous concern that the banking crisis could merge into a heavier risk-off event in markets.”
Deutsche Bank slumped as much as 15% intraday, the biggest decline since the early days of the pandemic in March 2020, before closing 9% down. It was the worst performer in an index of European bank stocks, which fell as much as 5.7%. Crosstown rival Commerzbank, Spain’s Banco de Sabadell and France’s Societe Generale also saw steep drops. The declines undermine hopes among authorities that the government-brokered rescue of Credit Suisse last weekend would stabilise the broader sector.
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