European banking shares extended their falls on Friday with Deutsche Bank falling over 13% on the German Xerta exchange, as efforts by policymakers to reassure investors over the health of the sector failed to calm nerves in the wake of a string of failures on both sides of the Atlantic.
In New York, Deutsche Bank shares were down more than 7% in premarket trading.
The fresh falls followed a spike in the cost credit default swaps (CDS) for a number of leading European banks which sparked renewed volatility.
Deutsche Bank’s pricing for CDS, a form of insurance for a company’s bondholders against its default, leapt to 173 basis points on Thursday night from 142 basis points the previous day.
Deutsche Bank’s additional tier one bonds, an asset class that hit the headlines this week after the controversial writedown of Credit Suisse’s AT1s as part of its UBS rescue deal, also sold off sharply. Reports suggested a number of other European banks were facing a hefty losses from the AT1 wipeout.
CDS pricing for other leading European banks also rose.
???? The #CDS spread of some European Banks has now surpassed the level seen during the UK Mini Budget Crisis!
Banking jitters on the European side of the Atlantic are flaring up again.
Markets will likely seek the next weakest link after #CreditSuisse pic.twitter.com/eR76Crsml0
— jeroen blokland (@jsblokland) March 24, 2023
Across Europe, banking share prices fell. In London, Barclays, NatWest, Standard Chartered and HSBC were all prominent fallers, down 6.5%, 6.0%, 5.8% and 4.5% respectively. In the US, Barclays fell nearly 4% before the opening bell, while NatWest was down more than 4% and HSBC lost 3%.
European and UK banks pic.twitter.com/t8g403NC6P
— Michael Hewson ???????? (@mhewson_CMC) March 24, 2023
In Europe, the Euro Stoxx banks index fell 5.8%. Deutsche Bank fell 13.5%, Commerzbank 8.5%, Société Générale 7.7%, BNP Paribas 7.1% and UBS 8.1%.
The latest falls left banking sharply lower for the year to date with the German lender, Deutsche, down more than 25%.
Image credit: Google Finance
—This story has been updated to include US stock data—