SVB deal lifts European banks, Deutsche bank shares rally (updated)

First Citizens Bancshares (Tennessee)

27/03/2023 13:34

(Adds background, comments, updates rates)
    By Joice Alves
       LONDON, March 27 (Reuters) - European bank stocks rose
on Monday, rebounding from last week's declines, amid improved
sentiment in the banking sector after a buyer emerged for the
deposits and loans of U.S. lender Silicon Valley Bank.
    Deutsche Bank  DBKGn.DE  shares helped lift European bank
stocks, which fell almost 4% on Friday, after a sharp jump in
the largest German lender's credit default swaps (CDS), a type
of insurance for bondholders, exacerbated worries around the
health of the European banking sector.
    First Citizens BancShares  FCNCA.O  said on Monday it bought
all the loans and deposits of failed SVB. Under the deal, unit
First–Citizens Bank & Trust Company will assume SVB assets of
$110 billion, deposits of $56 billion and loans of $72 billion.
    Earlier this month, the sudden collapse of tech-focused SVB
triggered the worst banking shock since the 2008 global
financial crisis.
    A "relative calm returned amid the choppy seas of the
banking crisis as a buyer was found for Silicon Valley Bank’s
assets," said Neil Wilson, chief market analyst at Markets.com.
    Shares in several mid-tier U.S. lenders also rose sharply on
Monday. 
    The STOXX banks index  .SX7P  was up 1.4% at 1150 GMT after
opening 2.3% higher, supporting the pan European STOXX 600
 .STOXX  index, which rose 1.1%.
    Deutsche Bank shares rallied more than 5%, after an 8.5%
fall on Friday. Its CDS  DB5YEUAM=MG  fell to 191 basis points,
after shooting up above 220 bps on Friday - the most since late
2018 -  data from S&P Market Intelligence showed.
    "It looks like Friday’s panic over Deutsche Bank was a bit
misplaced. But the steady drain of deposits from banks means a
slow motion problem is in the making, and could result in a
contraction in lending that brings on a recession," Chris
Beauchamp, chief market analyst at IG Group.
    "This is the bigger risk than the hunt last week for the
next domino to fall in the global banking system," he added.
    Lenders across the region have had a rough ride this month, 
with a state-orchestrated rescue of Credit Suisse by rival UBS
and turmoil among regional U.S. banks fuelling concerns for the
sector.
    
    

 (Reporting by Joice Alves, additional reporting by Chiara
Elisei; Editing by Amanda Cooper and Sharon Singleton)
 ((Joice.Alves@thomsonreuters.com; Twitter @joiceal;))