MADRID, March 15 (Reuters) – European banks are much more robust than before the previous financial crisis and better able to cope with financial stress, Spanish Prime Minister Pedro Sanchez said on Wednesday, seeking to calm a market rout triggered by a slump in Credit Suisse (CSGN.S) shares.
A more than 20% drop in Credit Suisse shares led a 6% plus fall in the European banking index (.SX7P), while five-year credit default swaps (CDS) for the Swiss bank hit a new record high, highlighting increasing investor concerns.
“Europe now has a reinforced supervision system … that was not in place at the beginning of the financial crisis and which has led to European banks having liquidity and solvency ratios that are much higher than they were before the financial crisis,” Sanchez said after news conference with Portuguese counterpart Antonio Costa.
After the 2008 financial crisis, supervisors tightened capital rules and the European Central Bank became the supervisor of most significant banks in the euro zone in 2014.
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But on Monday Germany’s Commerzbank (CBKG.DE) fell nearly 10%, while Deutsche Bank (DBKGn.DE) was down 8.4%. In Spain, shares in Sabadell (SABE.MC) and BBVA (BBVA.MC) fell around 10% and Santander (SAN.MC) and Caixabank (CABK.MC) were 7.4% and 6.3% lower, respectively.
Credit Suisse shares had hit record lows after its biggest shareholder said it could not raise its 10% stake, citing regulatory issues.
Spain’s central bank previously declined to comment on sharp drops in the share prices of the country’s top banks.
Sanchez urged caution and prudence, adding that since the beginning of the market tensions the government has been in contact with the European Central Bank, and authorities were closely monitoring the situation.
At 1411 GMT, Spain’s leading Ibex-35 index (.IBEX) was down more than 3.8%, its biggest percentage decline since Nov. 26, 2021.
While declining to comment, the economy ministry referred to remarks made by Economy Minister Nadia Calvino on Monday after the collapse of Silicon Valley Bank (SIVB.O), when she said Spanish banks had a healthy balance sheet.
Reporting by Jesús Aguado; Editing by Emma Pinedo, Mark Potter and Jane Merriman
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