Eurozone banking stress indicator hits highest level in eight months

LONDON, March 14 (Reuters) – A gauge of credit risk in the eurozone banking system jumped on Tuesday to its highest level since mid-July, in line with mounting investor panic over the risk of contagion of the crisis in three American countries. banks in less than a week.

The so-called FRA-OIS spread, which measures the difference between the euro zone’s three-month forward rate agreement and the overnight indexed swap rate, jumped to 21.08 basis points on Tuesday, the maximum of July 19, 2022.

European banks were particularly hard hit by the Silicon Valley Bank crisis over the weekend.

Although analysts say there is little risk of real contagion from SVB, the banking crisis has raised doubts among investors about the strength of banks’ balance sheets, especially now that interest rates are rising.

An index of European bank stocks has lost more than 11% of its value in the last three trading days alone, while bank stocks around the world have been affected.

(Reporting by Amanda Cooper; Editing in Spanish by Benjamín Mejías Valencia)