Deutsche Bank shares tumble, default insurance cost shoots up

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Deutsche Bank shares (DBKGn.DE) fell for a third day on Friday, after a sharp jump in the cost of insuring against the risk of default late the day before fueled concerns about the overall stability of Europe's banks.

Deutsche shares, which have lost a fifth of their value so far this month, were last down 5.5 percent at 8.843 euros ($9.57), not far off Monday's five-month low.

They closed 3.2 percent lower on Thursday, while the bank's credit default swaps (CDS)<DB5YEUAM=MG> - a form of insurance for bondholders - shot up to 173 basis points (bps) from 142 bps the day before, according to data from S&P Market Intelligence on Thursday.

This marks the largest one-day rise in Deutsche's CDS on record, according to Refinitiv data.

Some of Deutsche Bank's bonds meanwhile sold off too. Its 7.5 percent Additional Tier-1 dollar bonds fell by 1 cent to 74.716 cents on the dollar, pushing the yield up to 22.87 percent. That yield is double what it was just two weeks ago, according to Tradeweb data.

AT1s issued by banks have come under pressure since Credit Suisse was forced to write down $17 billion of its AT1s as part of a forced takeover by UBS at the weekend.

European banks have had a rough ride in the last week with developments at Credit Suisse and turmoil among regional US banks fueling concerns about the health of the global banking sector.

The STOXX 600 index of European banks - which does not include shares of Credit Suisse or UBS - has seen one of its most volatile weeks of trading in a year. The index was last down 2.1 percent, heading for a monthly decline of 17 percent.

Deutsche Bank shares tumble, default insurance cost shoots up

Deutsche

Bank

Shares

Tumble

Default

Insurance

Costs

Shoot

Up

Europe

Default

Value

Bondholders

Credit Suisse

UBS