Global banks shed $459B in market rout as Goldman Sachs loses on rate swing

Investors have wiped nearly half a trillion dollars from the value of bank shares around the world in the worst rout for the financial sector since the onset of the Covid-19 pandemic, Report informs via The Financial Times.

Financial stocks dived this week as the fallout from the collapse of Silicon Valley Bank spread through global markets. Banks in the US, Europe and Japan have collectively lost $459 billion in market value so far this month — the 16 percent fall is the sharpest slump since March 2020.

The heaviest losses came in the US, where the KBW Bank index has lost 18 percent in March. Europe’s Stoxx 600 banks index has fallen 15 percent, while Japan’s Topix banking sector index is down 9 percent.

Efforts to stabilize the financial system and head off broader panic have been only partly successful. Shares in troubled Californian bank First Republic fell more than a quarter in afternoon trading on Friday despite a $30 billion cash infusion from Wall Street banks including JPMorgan Chase and Goldman Sachs.

Credit Suisse shares fell 8 percent even after Thursday’s provision of a SFr50bn ($54 billion) emergency credit line from the Swiss central bank. The Zurich-based lender’s credit default swaps and bonds were trading at distressed levels.

The volatile markets have hurt even banks that are seen as stronger, with some affected by the yield on the two-year Treasury note falling at its fastest pace since 1987. Goldman lost about $200 million at its trading desk that deals in interest rate products, according to people familiar with the matter. Goldman declined to comment.

Global regulators held talks on Friday evening to discuss how to calm fears about the health of the financial system, with some focusing on options to stabilize Credit Suisse and its international subsidiaries.

Executives and board members at the Swiss lender are also debating the future of the 167-year-old bank, which for years has lurched from one crisis to another.