Banking Rout Takes Another Ominous Twist As Shares In Top European Banks Suspended

Banking Rout Takes Another Ominous Twist As Shares In Top European Banks Suspended
  • Shares in big European banks Credit Suisse, Societe Generale, BNP Paribas, Monte dei Paschi and UniCredit are suspended after sharp falls.
  • The shadow of the SVB collapse is looming large, but investors have taken fresh fright after Credit Suisse’s problems multiplied.
  • Investors seem worried that the ECB may still go ahead with a big rate hike despite the banking rout.
  • Banking stocks in London have also dropped sharply as sentiment has deteriorated.
.first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; }

Get The Full Henry Singleton Series in PDF

Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues

Q4 2022 hedge fund letters, conferences and more

Banking Rout Takes Another Ominous Twist

The banking rout has taken on another ominous twist with trading halted in shares of big European banks including Credit Suisse (NYSE:CS), Societe Generale (ETR:SGE), BNP Paribas (EPA:BNP), Monte dei Paschi (BIT:BMPS) and UniCredit (BIT:UCG).

Gates Capital Management Reduces Risk After Rare Down Year [Exclusive]

Gates Capital Management’s ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More

The fresh banking sell-off has taken hold as fears rise to the surface about the robustness of sector with the shadow of the SVB collapse still looming large. With the US banking sector downgraded to negative by Moody’s nervousness is super-high and that’s spilt over into a hot mess in Europe.

Investors took fresh fright after Credit Suisse’s problems multiplied. Shares in the bank plummeted by 20% after key investor Saudi National Bank turned down the role white knight and refused to ride to the rescue. SNB has cited regulatory issues but given that the bank has revealed it found material weaknesses it’s little surprise its steering clear of taking on any more risk in this current climate.

Banking stocks in London have also dropped sharply, as sentiment is badly shaken. Standard Chartered down more than 5% while HSBC and Lloyds fell by around 5%.

The calm that descended amid expectations that the Fed may press pause on rate hikes to restore financial stability has evaporated. It seems investors have been rattled by worries that the ECB may still opt for a big rate increase, despite the problems hard and fast monetary policy tightening has had on bond prices.

The worry is that banks sitting on large unrealised losses in their bond portfolios might not have sufficient buffers if there is a fast withdrawal of deposits.  Although the biggest players are judged not to be at risk, thanks to the chunky layer of capital they are sitting on and the stable nature of their deposits, the nervousness is palpable.

A game of whack a mole seems to be emerging, and problems are popping up elsewhere in the world. Investors seem to be waiting on words and action from the ECB, as so far policymakers have been quiet about what support there may be if the situation deteriorates further.’’

Article by Susannah Streeter, head of money and markets, Hargreaves Lansdown

Comments are closed.