He bank quake unleashed by the Silicon Valley Bank (SVB) bankruptcy, which occurred on March 9 in the United States, has had a high cost for the 12 large banks by volume of business on the Old Continent. These have lost 14.7% of market capitalization conjunta that they had at the close of the market that fateful Thursday until the session of this Monday, March 20, the day on which the strong volatility in the stock market began to stop and the titles of these companies began to recover. This supposes a loss of about 87,000 million euros. The joint value of the ten largest banks in the Eurostoxx Banks index, to which the two large British entities have been added, went from 598,261,639 million euros the day the SVB’s liquidity problems were made public to 510,854,994 million euros until the day it was ratified to save Credit Suisse with the purchase of its rival UBS, an operation encouraged by the Swiss authorities to avoid a european banking panic. These figures have been obtained by multiplying the value of the shares of each security by the number of shares in circulation in the two sessions in which the worst of the banking crisis took place, that is, between the 9th and 20th of March.
Bank securities have been subject to a strong volatility since that March 9, when doubts about the liquidity of the SVB were thrown into the air. This entity, the size of Unicaja and specialized in lending credit to the start-up ecosystem in the United States, has been one of the first to succumb to the Federal Reserve rate hike in the United States. All European banks were affected by the uncertainty unleashed by the bank’s deposit flight and the fear that more banks would be affected. For example, the shares of the French BNP Paribas were exchanged on March 9 at 62 euros per unit, while they are now being sold for around 53 euros. Another European financial giant, Deutsche Bank, has also depreciated. Their titles are now exchanged for around nine euros when on March 9 they had a value of 11.2 euros. In the case of ING, the titles have gone from 13.04 euros to be sold for around 10.7 euros. Banco Santander caressed four euros per title on March 9 and now they are exchanged for around three euros.
Fear for the SVB also affected Wall Street, which was left up to 1.07% on March 10, and infected the Asian market, which suffered losses of up to 2% in the sessions after the banking crisis in the United States. All this uncertainty moved to the European parquets. The Ibex 35 closed with a decline of 1.47%, up to 9,285 points, on March 10, with all bank securities in the red. Banco Sabadell dropped 5.11% while Bankinter lost 4.22%. Santander fell 4.21% and BBVA 3.41%. For its part, the banking subindex of the S&P 500 dropped as much as 7.5% on the day. Regulatory bodies in the United States launched a plan to protect deposits of Silicon Valley Bank (SVB) after its collapse, while another banking institution, Signature Bank, closed under the same parameters. Another entity in the United States, the First Republic Bank, has also had to be rescued with 30,000 million, which have been paid for by larger groups, such as JPMorgan, Bank of America, Goldman Sachs or Morgan Stanley.
“The banking business rests on trustwhen the market perceives that there is instability in these companies, these peaks of volatility occur in the stock market”, points out Víctor Álvarez, head of equities at the Tressis manager, who points out that Spanish banks are well capitalized and that their exposure to both SVB, like Credit Suisse, is limited “Now, it is difficult to predict what may happen,” he warns.
Although the stock markets have gradually recovered this week, experts suggest that it is not yet clear that the banking crisis is over. The Ibex 35 has dropped 0.4% this Thursday, lost 9,000 points and all the selective banks have closed in red. CaixaBank has dropped up to 3.49% of its value while Banco Sabadell has lost up to 3.35% and Bankinter has dropped 2.94%, being the worst of the day. The German DAX has closed flat with a very slight decrease of 0.05%, but the Deutsche Bank has left 3.18% and has been one of the most lagging values of the day.
The ten great European values
- BNP Paribas (France)
- Santander Bank (Spain)
- ING (Netherlands)
- Intesa Sanpaolo (Italy)
- BBVA (Spain)
- Nordea Bank (Finland)
- Unicredit (Italy)
- Deutsche Bank (Germany)
- Societe General (France)
- CaixaBank (Spain)
- HSBC (UK)
- Barclays (UK)
Crisis at Credit Suisse
As if the banking problems in the United States were not enough, uncertainty returned to the markets on Wednesday, March 15. After a day of truce of falls in the stock market, the Swiss Credit Suisse began experiencing problems in the middle of the week that compromised its liquidity. The delicate situation of the Swiss giant Credit Suisse, which has recognized internal problems in risk control and that in 2022 it presented losses of 7,800 million euros, again dragged down the valuations of the entire European financial sector. The entity even came to request a public statement of support for the Swiss National Bank after sinking 30% in the session.
In that day’s session, Sabadell dropped more than 11% and was the most punished bank stock on the Ibex. Other European entities were also affected by the earthquake caused by the Swiss entity. As an example, the French BNP Paribas, which lost 9.2%, the Dutch ING dropped 8.5% or Société Général, which plummeted 10.62%, while Deutsche Bank fell 8.2% and Italian Unicredit lost 8.52%.
Credit Suisse announced on Thursday, March 16, that it had borrowed 50 billion Swiss francs (about 50.6 billion euros) from the Swiss central bank to “preventively strengthen its liquidity“. To shore up the bank’s status, it has taken UBS, Credit Suisse’s main competitor, to agree to buy it for $3.25 billion.