Banking Stocks Pummeled in Europe
February 11 2016 - 5:30AM
Dow Jones News
European banking stocks were hammered Thursday as investors
continued to question lenders' profitability and balance-sheet
strength.
Bank stocks on the Stoxx Europe 600 were down 5.9% amid a
broader selloff in European equities, taking year-to-date losses
for the sector to 28%.
Banking equities have suffered a turbulent start to the year
amid investor concerns about lenders' capital buffers and ability
to navigate volatile markets. The selloff has prompted concerns
that the instability could spread to the broader economy.
Shares in Socié té Gé né rale SA fell 14% Thursday after the
French bank warned it may fall short of its profitability target
this year. In Switzerland, Credit Suisse Group AG shares dropped
7.7% and UBS AG slumped 8%.
Italian lenders were hit hardest Thursday. Unione di Banche
Italiane SpA fell 17% after reporting lower-than-expected earnings,
while Mediobanca SpA shares fell 9.6% and UniCredit SpA stocks
slumped 7.4%. Trading was suspended in shares of all three.
Deutsche Bank AG, whose recent falls helped trigger the carnage,
was down 6.8%, reversing some of Wednesday's rally.
Greek banks continued their sharp falls, with Eurobank Ergasias
SA down 26%.
The origins of the rout are varied, but a major reason cited is
that as central banks usher in negative interest-rate policies
banks will struggle to make money.
"We're revising down expectations for rates, which will put down
pressure on net interest margins," said Bo Christensen, an analyst
at Danske Invest.
Analysts said banks were also being pressured by falls in the
price of oil and the selloff on the U.S. high-yield debt market. On
Thursday, the price of Brent oil, the international benchmark, was
down 1.2%, having fallen 18% this year.
"Markets are finding it very hard to find a bottom in the price
of oil, and very hard to find a bottom for U.S. high yield debt,"
pressuring the banking system, Mr. Christensen said.
Liam Moloney and Riva Gold contributed to this article.
Write to Alistair MacDonald at alistair.macdonald@wsj.com
(END) Dow Jones Newswires
February 11, 2016 06:15 ET (11:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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