[ad_1]
Some stability has
returned to the banking sector.
UBS shares are down 5% today having been 14% lower this morning.
Shares in other European banks have also recovered after early steep falls.
Deutsche Bank was down 10% but is now 3% lower.
Regulators in Europe, the UK and the US will be breathing a sigh of
relief that the deal for UBS to buy Credit Suisse at a knockdown rate, with
offers of cheap credit and a ready supply of dollars has seemingly calmed
frayed nerves.
This was an enormously complex deal to do over a weekend and it is
perhaps no surprise that many feel it leaves some awkward loose ends. The fact
that shareholders in Credit Suisse got $3bn from the deal while
some lenders to the troubled bank got nothing at all is not what the way it’s
supposed to work.
Traders are mystified and alarmed that this deal ignored the
practice of prioritising
bond holders over shareholders and
similar bonds in other banks have tumbled in value today.
The next test for the improvement in sentiment over the last three
hours will be the opening of US financial markets.
The regulators have moved
quickly and offered more help than banks have currently taken up – which means
they either fear things could be worse than they look, or that they want to stay
a step ahead of events at every turn they can.
Everyone hopes it’s the
latter.
[ad_2]
Source link