Deutsche Bank shares rebounded on March 27 after plummeting by as much as 16 percent on Friday, suggesting investors may be feeling slightly more optimistic about the current state of the European banking industry.
Shares of Germany’s largest bank were up 6.3 percent as of 15:04 p.m. in Frankfurt, while other European banking stocks, including Commerzbank AG, Barclays Plc, and Banco Santander SA also saw gains.
The Euro STOXX banks index was also up 1.6 percent, and the pan European STOXX 600 was up 1.2 percent as of Monday afternoon.
After tumbling by as much as 16 percent on Friday, Deutsche Bank shares closed 8.5 percent lower when the cost of its five-year credit default swaps (CDS), a type of default insurance for bondholders to protect against potential defaults, rose above 220 basis points, up from 142 basis points earlier in the week.
The increase prompted concerns among investors that the German banking giant could be the next institution to be hit with difficulties after Credit Suisse’s near failure and the collapse of Silicon Valley Bank (SVB) and Signature Bank in the United States, although there did not appear to be a specific problem with Deutsche Bank itself.
“There is no reason to be concerned about it,” Scholz added when quizzed over whether the lender would become “the next Credit Suisse.”
Silicon Valley Bank Finds Buyer
Elsewhere, on Sunday, U.S. regulators announced that First Citizens Bank is buying the loans and deposits of failed SVB after entering into a purchase and assumption agreement.The 17 former branches of SVB will open as First Citizens Bank & Trust Company on March 27, 2023, the FDIC said.
Overall, the deal is expected to cost the FDIC around $20 billion, although the exact cost will be determined once the FDIC terminates the receivership.
Elsewhere, Chris Beauchamp, chief market analyst at IG Group, said that Friday’s panic over Deutsche Bank may have been “misplaced,” but noted that the storm may not be over just yet.