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ECB's De Guindos warned finance ministers of bank vulnerabilities - reports

Published 03/16/2023, 08:48 AM
Updated 03/16/2023, 09:23 AM

By Geoffrey Smith 

Investing.com -- The European Central Bank warned Eurozone finance ministers earlier this week that some banks in the single currency zone could be vulnerable to rising interest rates, newswires reported Thursday.

The news, which came out less than an hour before the ECB announces the decisions from its latest policy meeting, sent a fresh chill through European markets, hitting bank stocks and driving money into bonds, pushing sovereign yields lower.  

Eurozone banks had reacted negatively to news of the three U.S. bank failures last week, and fell further earlier this week on unrelated developments at Credit Suisse (SIX:CSGN), which is halfway through an expensive restructuring process that will see it exit investment banking. 

Credit Suisse had secured a $54 billion credit line and a public vote of confidence from the Swiss National Bank overnight, sending its stock and bond prices sharply higher in early trading and pulling the rest of the European bank sector with it.

However that move reversed in the course of the moment, and some of the region's biggest banks hit new lows after news emerged that De Guindos had warned finance ministers of bank vulnerabilities. Bloomberg reported that De Guindos had made his comments on Tuesday, before the downward lurch in Credit Suisse stock.

By 09:00 ET (13:00 GMT), Deutsche Bank (ETR:DBKGn) stock was down 1.6% at a new five-month low, while Portugal's largest bank Banco Comercial (ELI:BCP) was down 3.0%, a two-month low. BNP Paribas (EPA:BNPP) stock was up 0.4%, while Santander (BME:SAN) stock was up 0.8% and UniCredit (BIT:CRDI) stock was up 0.3%.

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