LONDON (Reuters) – The European banking index is heading for its biggest weekly decline in 17 months, due to the sector’s latest quarterly sluggishness and a sharper sell-off in global equities.
At 12.20 the STOXX index was down 2.6%, after yesterday’s 4.5% drop, bringing the balance for the week to -5.8%. It was the worst weekly performance since March 2023, when the sector was rocked by the collapse of Credit Suisse and concerns about the stability of US regional banks
Global central banks are starting to cut interest rates. The Bank of England cut yesterday and the Federal Reserve is preparing for a cut next month – and this tends to damage the profitability of lenders.
Societe Generale is the center of this movement. Yesterday it cut its guidance for the net interest income of its retail operations in France, sending the stock down 8% and weighing on the sector overall. The stock fell 5.3% to its lowest level since October.
Swiss bank UBS, which is not part of the banking index, fell 6.8%, following the sector’s collective downward movement after the Swiss market closed yesterday for the holidays.
The banks’ performance was part of a broad sell-off in stock markets, with other sectors, including tech, hit hard. Even macro data showing a slowdown in global growth and central bank rate cuts are not helping lenders.
According to data from LSEG, European banks lost nearly $100 billion in market value in just one week.
(Translated by Laura Contemori, editing by Andrea Mandalà)