For the past three days, I've been trying to get my hands around this supposed "banking crisis," particularly in Europe.
I get why there is concern in Europe, but I don't at all get the selloff in U.S. banks.
You didn't know there was a banking crisis? Everyone seems to think there is some kind of crisis because the stocks—particularly the European bank stocks—seem to be telling us something is wrong:
European banks YTD
Deutsche Bank down 34.6%
Societe General down 25.8%
BNP Paribas down 24.3%
Banco Santander down 24.0%
UBS down 20.9%
Yikes! This is after one month. The concerns about Europe fall into several buckets:
1) ongoing restructuring and litigation charges.
2) Flattening yield curve/negative rates.
3) slower European growth.
4) Asset management slowdown. Asset management has suffered because wealthier clients aren't investing.
5) Book value issues: European banks did not take the big writedowns that U.S. banks took; there's concern there may be more asset writedowns that would cause book values to decline.
6) Capital positions. While the U.S. banks were out raising capital and selling new shares in 2008-2009, the European banks didn't. The result: U.S. banks don't need to raise capital, but European banks probably do.
I get this. What I don't get is what's going on with U.S. banks:
U.S. banks YTD
Fifth Third down 24.8%
Bank of America down 24.3%
Zions down 21.9%
Key down 19.7%
JP Morgan down 14.8%
Yikes again! Even the regionals are getting hi
Read more: Is there a banking crisis in the United States?
I get why there is concern in Europe, but I don't at all get the selloff in U.S. banks.
You didn't know there was a banking crisis? Everyone seems to think there is some kind of crisis because the stocks—particularly the European bank stocks—seem to be telling us something is wrong:
European banks YTD
Deutsche Bank down 34.6%
Societe General down 25.8%
BNP Paribas down 24.3%
Banco Santander down 24.0%
UBS down 20.9%
Yikes! This is after one month. The concerns about Europe fall into several buckets:
1) ongoing restructuring and litigation charges.
2) Flattening yield curve/negative rates.
3) slower European growth.
4) Asset management slowdown. Asset management has suffered because wealthier clients aren't investing.
5) Book value issues: European banks did not take the big writedowns that U.S. banks took; there's concern there may be more asset writedowns that would cause book values to decline.
6) Capital positions. While the U.S. banks were out raising capital and selling new shares in 2008-2009, the European banks didn't. The result: U.S. banks don't need to raise capital, but European banks probably do.
I get this. What I don't get is what's going on with U.S. banks:
U.S. banks YTD
Fifth Third down 24.8%
Bank of America down 24.3%
Zions down 21.9%
Key down 19.7%
JP Morgan down 14.8%
Yikes again! Even the regionals are getting hi
Read more: Is there a banking crisis in the United States?
