Negative interest rates, toppling bond yields, greater regulation and rising rec...
LONDON - Negative interest rates, toppling bond yields, greater regulation and rising recession signals have wiped out most of the value of European banks, with their shares now at meltdown prices approaching the days of the Berlin Wall.
That means the banks are worth now what they were when Greece, Ireland and Portugal needed bailouts, Cyprus ordered its banks to seize some deposits and Spain’s banks were saved from collapse only by a government rescue. The wider banking sector for the bloc is now worth less than half a trillion dollars — about half the size of Microsoft. It was down nearly 3% on Wednesday after Germany’s economy shrank and the U.S. bond market showed red flags pointing to recession.
“We do not expect it to be especially generous to the banking sector given the ECB’s belief that negative rates are not yet hurting banks’ profitability,” Credit Suisse lead banking analyst Jon Peace said.Europe’s largest economy, Germany, is also at the brink of a recession and this is unnerving investors as this could mean that another banking crisis is looming.
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