Bank stocks posted another significant decline today, with Deutsche Bank and UBS Group taking a heavy hit amid concerns that the worst problems facing the sector since the 2008 financial crisis have not yet been resolved.
German banking giant Deutsche Bank posted a decline for the third consecutive day, plummeting more than 11% following a sharp rise in the cost of insuring its bonds against the risk of default. Its shares have lost one-fifth of their value since the beginning of the month, and its CDS (credit default swap premiums) recorded their largest single-day increase on record yesterday, according to Refinitiv data.
Shares of UBS Group AG and Credit Suisse AG fell 6.3% and 6.7%, respectively, after Bloomberg News reported that they are among the banks being investigated by the U.S. Department of Justice to determine whether financial industry professionals helped Russian oligarchs evadesanctions.
The global banking sector was shaken following the sudden collapse this month of two U.S. regional banks, which sparked fears of contagion to other financial institutions. Policy makers have emphasized that the current turmoil differs from the global financial crisis 15 years ago, noting that banks are better capitalized and funds are more readily available.
At the same time, stocks on international markets were under pressure, while investors’ shift toward so-called safe-haven assets provided support for government bonds.
The MSCI World Index earlier posted a decline of 0.4%, although it is on track for a weekly gain of 1.5%. The pan-European STOXX 600 index earlier fell 1.5%, although it is also on track for a weekly gain. Paris earlier fell 2.11%, London 2.03%, Frankfurt 2.03%, and Milan 2.51%.
In the government bond market, the yield on the 2-year U.S. Treasury note fell by 8 basis points earlier to 3.71%. Yields on 10-year bonds fell by 6 basis points to 3.34%. Yields on 2-year German bonds also fell by 16 basis points earlier to 2.34%.
