SHARES in major European banks slid again yesterday after confidence was shaken further in the global banking system, writes Scott Wright.
Barclays, HSBC, NatWest Group and Lloyds Banking Group all saw sharp falls after shares in Deutsche Bank plunged following reports that the cost of insuring against its default had increased.
Meanwhile, it emerged that UBS and Credit Suisse are among banks that will be investigated by the US Department of Justice over allegations they helped Russian oligarchs avoid sanctions imposed following the invasion of Ukraine. UBS rescued Credit Suisse in an emergency deal on Sunday.
READ MORE: Investors exit major UK banks amid collapse of Silicon Valley
Yesterday’s turmoil comes amid a rocky period for the global banking system that began with the failure of Silicon Valley Bank, Silvergte and Signature Bank in the US earlier this month. HSBC took over the UK arm of SVB for £1 in a deal brokered by the UK Government and Bank of England to prevent contagion from the failure spreading to Europe. UBS took over Credit Suisse after concerns grew around the strength of its Swiss counterpart.
Susannah Streeter at Hargreaves Lansdown said: “Waves of bad news keep hitting the banking sector and the tide doesn’t look like it’s set to turn any time soon.
READ MORE: Major UK banks recover poise after fresh turbulence on stock market
“However, the European Central Bank has made it clear that it is standing by ready to deploy fresh tools to boost liquidity should the situation deteriorate and president Christine Lagarde has again reassured EU leaders in Brussels that the banking sector remains resilient with strong capital positions.
"The message from the Bank of England has been on repeat over the past fortnight. Although it’s monitoring the situation it’s stressing that there is still no systemic risk and that the UK banking system remains safe and sound.’’
The Bank of England and the US Federal Reserve lifted interest rates this week amid continuing concern over inflation. Ms Streeter said the rises “could make a precarious situation worse for some smaller banks, particularly those sitting on large bond holdings which have lost value as monetary conditions have been dramatically tightened.”
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereLast Updated:
Report this comment Cancel