LONDON, Feb 11 (Reuters) - The cost of insuring exposure to Deutsche Bank subordinated debt via CDS rose on Thursday to a record high as mounting fears about European banks’ profitability led to a heavy selloff in their shares.
Data from Markit showed that five-year subordinated credit default swaps (CDS) for Deutsche Bank rose 85 basis points from Wednesday’s close to a record high of 540 basis points, whilst one-year subordinated CDS blew out 114 bps to 552 bps.
The five-year senior CDS rose 43 bps from Wednesday’s close to 275 bps, the highest level since 2011, Markit data showed.
European bank shares have hit multi-year lows this week on fears about their ability to cope with a low-growth, low interest rate environment.
The STOXX Europe 600 Banks index fell 6 percent on Thursday to its lowest level since August 2012. Shares in Deutsche Bank have hit their lowest since 2009, having lost 40 percent so far this year
The ITraxx European senior financials index of credit default swaps also hit its highest since September 2013 . The indexes track financial groups’ CDS and serve as a proxy for credit risk. (Reporting by Claire Milhench and Sujata Rao)