Because a large number of important banks suddenly went bankrupt, the fear is good. Clearly, we could face another credit crunch. Investors in Deutsche Bank and UBS in particular are still concerned.
ECB’s Lagarde not concerned
Meanwhile, the leaders of the EU member states are in Brussels to discuss various issues, including undoubtedly the fragility of the banking system. ECB Director Christine Lagarde was also present at the summit.
According to her, the European banking sector is standing strong for it. In fact, Lagarde believes that this is the right time for banks to cooperate more closely between different EU countries. There is quite a bit of controversy about this, because banks in southern Europe are much weaker than northern banks.
According to the top woman, there is also no need to choose between financial stability and price stability. In doing so, she suggests that the ECB still wants to bring inflation back to 2% as well as to keep the financial sector stable. Banks are also clearly suffering at the moment.
For example, Credit Suisse, one of the largest investment banks in Europe, has already been forced to go bankrupt by UBS. The Swiss government and UBS want to close the deal as soon as possible, hopefully already by the end of April. That is incredibly fast for the takeover of a so-called system bank. The parties involved hope that this will prevent ‘contamination’ of other banks.
Worry about Deutsche Bank
However, investors still have concerns. The shares of most are European banks fell sharply at the opening of the stock exchange; At the time of writing, ING is almost 4% down. The same applies to BNP Paribas, France’s largest bank.
According to Reuters the pressure is on Deutsche Bank and the Swiss UBS largest, and that is reflected in share prices. At the time of writing, they are more than 10% and about 4% respectively, measured from yesterday’s closing price.
Stuart Cole of Equiti Capital told Reuters that Deutsche Bank has been the center of attention for some time – judging by the price in a not-so-positive context. Germany’s largest bank, like Credit Suisse, has gone through a major restructuring, but none of the measures seem to have really worked.
It may also be difficult at UBS. US investment bank Jefferies has lowered its buy rating on UBS shares from ‘buy’ to ‘hold’. Thanks to the acquisition of Credit Suisse, the bank now has much more risky assets on the books.
Crypto benefits from banking crisis
For the time being, crypto does seem to benefit from the problems of banks. Since March 10, bitcoin (BTC) is up about 40%. An important factor in this was probably that Silicon Valley Bank ran into problems in early March. Despite the brief crash of USDC, bitcoin has not taken much notice of this for the time being.
