Despite reassuring statements from the European authorities, the day after the takeover of the bank Credit Suisse by its great rival UBS at a bargain price, the European banking sector was unscrewing on the morning of Monday, March 20 at the opening of the markets. The rescue operation did not reassure investors about the stability of the banking system. Swiss authorities announced on Sunday an agreement for UBS to buy its historic rival Credit Suisse for 3 billion Swiss francs (3.03 billion euros).
The action of the Swiss banking giant UBS fell by 8.77% in the first exchanges on Monday, to 15.61 Swiss francs following the takeover, under pressure from the Swiss authorities, of its rival Credit Suisse to avoid its sinking. For its part, the action of Credit Suisse fell below the price of the offer of UBS, collapsing by 63.7%, to 0.6752 Swiss francs.
Around 9:15 a.m. Paris time, the European banking sector index (STOXX Europe 600 Banks) fell by 5.92%. In Paris, BNP Paribas tumbled more than 8% and Societe Generale, more than 7%. In Frankfurt, Deutsche Bank lost more than 6% and Commerzbank, nearly 5%. In London, Standard Chartered yielded more than 6%; NatWest more than 4% and HSBC 3%.
The Minister of Economy, Bruno Le Maire, said Monday that the government remained attentive to the consequences on the markets of this agreement. “I am delighted with this agreement, it is a good agreement, said the minister on RMC – BFM-TV. However, we are talking about a bank with a balance sheet of more than 750 billion euros, it weighs heavily in the European context, so we remain extremely vigilant about the reaction of the markets. »
European markets opened sharply lower on Monday morning, weighed down by banking stocks. Earlier in the day, the Tokyo Stock Exchange closed sharply lower (−1.42%).
“French banks are solid”
However, after a week when banking stocks suffered on the markets, “French banks are solid, they have been tested regularly”, insisted Bruno Le Maire. With the Basel III agreements, “we have imposed extremely strict rules on French banks, he continued. When it was necessary to negotiate them, the French banks were not satisfied, finally we reached an agreement and (…) we are very happy to have them today”.
A few days after a first stock market shock caused by the bankruptcy of the American bank Silicon Valley Bank (SVB), the difficulties of Credit Suisse, precipitated by the refusal of its first shareholder Saudi National Bank (SNB) to increase its stake in the capital, have rocked the markets in recent days.
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Propelled by growing worries about the banking sector, the price of gold rose above the symbolic threshold of $2,000 an ounce on Monday. The yellow metal, a traditional safe haven, gained some 0.33% to $1,995 in the morning, after rising to $2,009.73. Since the bankruptcy of the American SVB, the price of gold on the financial market has risen by almost 9%.
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