European bank stocks slide on worries over their holdings of bonds

The Stoxx Europe 600 XX:SX7P banks index dropped over 4%, with shares in Deutsche Bank XE:DBK down 7%, Bank of Ireland IE:BIRG down 6% and HSBC Holdings UK:HSBA falling 5%. On Thursday, the SPDR S&P Regional Banking ETF KRE slumped 8%.The Stoxx Europe 600 SX7P banks index dropped over 4%, with shares in Deutsche Bank DBK down 7%, Bank of Ireland BIRG down 6% and HSBC Holdings HSBA falling 5%. On Thursday, the SPDR S&P Regional Banking ETF KRE slumped 8%.

Bank fears have been exacerbated this week by Silvergate Capital SI voluntarily liquidating its banking subsidiary, and Silicon Valley Bank parent SVB Financial SIVB launching a $1.75 billion share sale to plug a hole caused by the sale of a loss-making Treasury securities portfolio. “This is an issue that could hit all the banks, including the big banks, because the banks amassed a lot of assets since the 2007/2008 financial crisis at rising prices, and they had to pay nearly no compensation for bank deposits, as interest rates have been near zero for such a long time,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

Banks that have traditionally borrowed short and lent long are being hurt a deeply inverted yield curve. The 2-year yield TMUBMUSD02Y earlier this week was its most inverted against the 10-year yield TMUBMUSD10Y since 1981. The German 2-year TMBMKDE-02Y yield is also higher than the German 10-year TMBMKDE-10Y .

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European banking stocks sink as Silicon Valley Bank jitters spreadEuropean banking stocks sold off sharply in early trade Friday as a global contagion effect took hold after shares in U.S. bank SVB Financial plunged 60%. Everyone is awakening to the reality that the time bomb might be in their bond portfolio and that raises the question “will there be a panic in the bond market?” RED FRIDAY! And yet again, the capitalists, the smart guys, the investors, making bad decisions, losing billions of dollars and the ones at the top, who make all these decisions, can still walk away worth millions… it’s a rigged, broken system, these fucks should be regulated as hell!!
Source: CNBC - 🏆 12. / 72 Read more »