Update (0900ET): The jawboning has begun:
GERMANY'S SCHOLZ: EUROPEAN BANKING OVERSIGHT IS ROBUST AND STABLE, DEUTSCHE BANK IS `VERY PROFITABLE', NO REASON FOR WORRY
ECB'S LAGARDE TELLS EU LEADERS EURO AREA BANKING SECTOR STRONG, ECB FULLY EQUIPPED TO PROVIDE LIQUIDITY TO EURO AREA FINANCIAL SYSTEM, IF NEEDED
MACRON: EUROPEAN BANKS HAVE SOLID FUNDAMENTALS
That prompted a (very) brief pop in bank stocks...
Goldman Sachs' traders said they think the pain in European banks is"simply a function of market selling leveraged and opaque business models post CS, with some discomfort on what may roll out of 1Q IB earnings following the spike in rates vol. There’s also 7% of the loan book in CRE (EUR33bn), of which 51% in the US. Total office exposure is 34%, which is the market’s core area of concern, so could say the range for US office is EUR5.5-11bn"
But then there's this...
Last night, amid the Fed's H.4.1 report, we noted an unprecedented surge in foreign official Repo ($60 billion) under the Fed's new FIMA repo facility, which means that the offshore scramble for dollars was alive and well, and someone really needed access to USD. The assumption was that it was Credit Suisse (or UBS) shoring up some shortfalls, but with the action of the last couple of days, others are worrying that there is more afoot in the EU banking system.
After brief respite earlier in the week, European bank stocks are cratering once again, now at 3-month lows (catching down to Senior Financial CDS)...
Deutsche Bank stock has crashed to 5-month lows...
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