ING and ABN AMRO red below AEX, Deutsche Bank falls

Banks ING and ABN AMRO were at the bottom of the AEX index on Friday, showing significant losses. Other European banks were again hit hard, with Deutsche Bank in particular under fire. Investors were concerned about the stability of the financial sector after earlier problems at US banks and the bailout of ailing Credit Suisse.

ING and ABN AMRO fell almost 5 percent. In Frankfurt, Deutsche Bank also fell 13 percent. The drop followed a sharp increase in the cost of insuring the default of Germany’s biggest bank. Bondholders can insure their loans against the risk of a bank defaulting on its bonds through so-called credit default swaps (CDS). As the risk of default is estimated to be higher, the cost of such insurance increases.

Swiss bank UBS, which took over rival Credit Suisse last weekend, lost 8 percent in Zurich. UBS and Credit Suisse are among the banks under investigation by the US Department of Justice for helping Russian oligarchs evade Western sanctions, Bloomberg News reported. French bank BNP Paribas fell 6 percent in Paris and British bank Barclays fell 6 percent in London.

In addition, recent interest rate hikes by central banks still reverberated through stock markets. This week, central banks in the United States, United Kingdom, Switzerland and Norway raised their interest rates in a fight against persistent inflation. Last week, interest rates in the Eurozone already rose. Earlier struggling US regional banks Silicon Valley Bank and Signature Bank are said to have run into trouble due to the rapid rise in interest rates.

The AEX was trading 1.6 percent in the red at 731.62 points at midday. Midcap fell 2.8 percent to 914.66 points. Shares in Frankfurt, London and Paris lost up to 2.1 percent.

Not only banks but insurance companies also suffered collapse. Aecon, NN and ASR were on the tail end of the AEX with declines of up to 4.8 percent. Significant losses occurred outside the financial sector as well. Oil and gas group Shell, for example, lost 3.9 percent. Food group Unilever led some risers with a gain of 0.8 percent.

The euro was at $1.0731 against $1.0889 the previous day. U.S. oil prices fell 3.4 percent to $67.56 a barrel. Brent crude was down 3.2 percent at $73.52 a barrel.