BRUSSELS Feb 11 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,
(Additional reporting by Tom Koerkemeier and Robert-Jan
Bartunek, writing by Jan Strupczewski)