European Banks Fall on Concern Cyprus Levy to Be RepeatedNicholas Comfort
European banks fell after Dutch Finance Minister Jeroen Dijsselbloem said a tax on deposits at Cypriot banks may be repeated at other lenders as part of efforts to fight the debt crisis.
The Stoxx 600 Banks Index fell 1.7 percent to 164.06 at 4:46 p.m. in Frankfurt. France’s Societe Generale SA led declines, sliding 6.1 percent, while Italy’s Banco Popolare SC lost 6 percent and Intesa Sanpaolo SpA dropped 5.8 percent.
Dijsselbloem, who also chairs meetings of euro-area finance ministers, said in an interview with Reuters and the Financial Times that European leaders will ask holders of uninsured deposits to contribute to the recapitalization of their banks if necessary. Simone Boitelle, a spokeswoman for the Dutch Finance Ministry, confirmed the comments in a phone interview today.
“Investors are taking these remarks poorly,” Douglas Borthwick, a managing director and head of foreign exchange at Chapdelaine & Co. in New York, said in e-mailed remarks. If “these comments are being translated correctly, then the euro-dollar will see new selling pressures, as depositors in Italy, Spain, Portugal and Ireland with balances over 100,000 euros ($128,880) nervously eye their deposits.”
The banks index rose as much as 1.7 percent earlier today after Cyprus reached a deal with creditors on a 10 billion-euro bailout, avoiding a disorderly default and a collapse of its banking industry. That agreement called for the closing of Cyprus Popular Bank Pcl, the country’s second-biggest bank, and spared losses for depositors with less than 100,000 euros.