BRUSSELS, Feb 11 (Reuters) - The sell-off in European bank stocks is exaggerated and not a cause for worry now, euro zone finance ministers said on Thursday, dismissing a link between bearish investors and a new EU law on who has to share the costs of EU bank failures.
European banks slumped to new multi-year lows on Thursday, with concerns mounting over their profitability in a low-growth and low-interest rate environment.
The STOXX Europe 600 Banks index fell 6 percent to its lowest level since August 2012, dragged down by lenders such as Societe Generale, which plummeted 14 percent after posting a lower than expected rise in fourth-quarter net income.
But euro zone finance ministers, meeting in Brussels to discuss the latest economic outlook for the 19 countries sharing the euro, appeared unruffled.
“It doesn’t worry me at this particular moment,” Finnish Finance Minister Alexander Stubb said on entering the meeting. “We will probably talk about it in the corridors, but it is not on the agenda. I don’t think it should be.”
“I think we should be pretty relaxed about the situation at this particular moment. We should have a look at market turbulence during the first 3 weeks of January,” Stubb said.
“That was quite substantial for sure, but we want to have the euro and we want to have mechanisms that defend the area so I am not worried,” he said.
Slovak, Spanish and German finance ministers expressed similar views, noting that the euro zone has almost completed building a banking union -- with joint supervision of banks and rules and funds for handling bank failures -- that provided a safeguard against turbulence in the banking sector.
“I believe it is also partly because of an over-reaction by markets,” Germany’s Wolfgang Schaeuble said.
Asked for a comment to the volatility of Deutsche Bank shares, which were down more than 6 percent soon after he spoke, Schaeuble said: “My state of mind is always focused and relaxed before meetings of the Eurogroup.”
The sharp falls in bank stocks coincided with the entry into force at the start of the year of a new EU law, that makes banks’ shareholders, bondholders and even large depositors liable for losses in case of a bank failure and resolution.
But Italian Finance Minister Pier Carlo Padoan said there was no link between the two.
“I don’t see this connection,” Padoan told reporters in answer to a question if the two issues, which coincide in time, were linked. (Additional reporting by Tom Koerkemeier and Robert-Jan Bartunek, writing by Jan Strupczewski)