Proactive Investors - Lloyds Banking Group PLC stood out among European banking shares hit by renewed jitters in financial markets following the takeover of Credit Suisse by UBS.
In London, shares rallied after early falls with Lloyds, HSBC Holdings PLC, Standard Chartered PLC, Barclays PLC and NatWest Group PLC down 1%. 2%, 4.1%, 2.6% and 1.3% respectively.
Over in Europe, UBS shares slipped 8.6% to Sfr15.64 after its US$3.25bn rescue deal for Credit Suisse which itself tumbled 63% to SFr0.68.
Falls were also widespread across the banking sector. The Euro Stoxx 600 banks index fell 4.7% to 134.46 with leading names in the European banking sector all lower.
Deutsche Bank (ETR:DBKGn) fell 9.8% to EUR8.42, Commerzbank (ETR:CBKG) slid 7.9% to EUR8.45, Banco Santander (BME:SAN) (LSE:BNC) (Banco Santander (LSE:BNC)) was 4.3% lower at EUR3.00, UniCredit (LON:0RLS) declined 5.1% to EUR15.10 while, in Paris, BNP Paribas (EPA:BNPP) and Societe Generale (EPA:SOGN) were 6.8% and 7.7% lower respectively.
The wipeout of US$17bn of Credit Suisse bonds as part of the deal between Switzerland’s two largest banks sparked concern about similar debt triggering further pressure on financial stocks.
Susannah Streeter, head of money and markets, Hargreaves Lansdown (LON:HRGV) pointed out that the focus “is shifting to the implications of high-risk bond holders in banks, after holders of more risky Credit Suisse debt saw their investment wiped out, as under the deal those additional tier 1 bonds were valued at zero.”
In a bid to calm market jitters, the Federal Reserve and other global central banks announced fresh measures to improve US dollar liquidity.
In a joint statement released on Sunday, the world’s leading central banks said that they will launch daily operations to make funding available via standing swap lines. Previously, those operations were conducted on a weekly basis.
The Fed, European Central Bank, Bank of England and the Swiss National Bank are among those involved in what was described as a “co-ordinated action”. They were joined by the Bank of Canada and the Bank of Japan.
In signs of further stress in the sector, Flagstar Bank owner New York Community Bank agreed to buy most of the operations of Signature Bank, the failed New York City-based lender.
The Federal Deposit Insurance Corporation announced the deal on Sunday, one week after the US banking regulator and deposit insurer took control of Signature.
--updates share prices-