Statement by German Chancellor Scholz on Deutsche Bank's falling shares

The crash of the shares of Credit Suisse, which is one of the largest banks in Switzerland after the banks that went bankrupt in the US, caused the concern "Will the crisis spread to Europe?" German Chancellor Olaf Scholz answered journalists' questions at the press conference at the end of the European Union (EU) Leaders' Summit held in Brussels.

Scholz stated that EU leaders discussed the latest developments in global markets and the situation in European countries at their meeting yesterday. Emphasizing that the European banking system is stable, Scholz said that banks in the EU are subject to strict supervision and have strong capital resources.

Asked by a journalist whether the German federal government could offer a bailout to the Germany's largest market share bank  Deutsche Bank, in an emergency, Scholz said: "There's no need to worry about anything."

Scholz commented, “Deutsche Bank has completely restructured its business model by modernizing it and is a very profitable bank.”

Deutsche Bank shares fell below 8.30, declining from 12 percent today, as stress in the banking system continues to mount after the US central bank Fed's latest interest rate hike. The price of the stock has approached the lowest level in the last 5 months.

The CDS cost of the bank's bonds has increased by more than 40 percent in the last 3 days to 220 points. This means that investors have to pay 220,000 euros to secure the 10m euro Deutsche Bank bond package. In Europe, the Stoxx 600 Banking Index fell nearly 4 percent today,

Shares of other German bank Commerzbank also fell more than 5 percent today.

SHARE LOSS AFTER SVB

Deutsche Bank and Commerzbank shares have lost more than 25 percent since the bankruptcy of Silicon Valley Bank in the US and the start of the banking crisis about two weeks ago.

SWITZERLAND'S GLOBAL BANK SAVES THE COMPETITOR

The developments in Swiss bank Credit Suisse and the bankruptcy of Silicon Valley Bank (SVB) and Signature Bank in the USA raised concerns about the health of the global banking sector, while these concerns have put European banks under pressure since March 17.

Since the emergency bailout of Credit Suisse by rival UBS, many investors have worried that the confidence crisis will spread to other financial institutions. In Europe, banks came under pressure after the deal between UBS and Credit Suisse wiped out the AT1 bond, a subordinated debt instrument with a face value of 16 billion francs ($17.3 billion).

The rescue of Credit Suisse caused volatility in European markets as bond prices of banks were under pressure. CDS of other major financial institutions such as UBS, Societe Generale also rose today.