zeb.market flash (Issue 21 – April 2017)

K e y t o p i c s

I. State of the banking industry

  • The banking sector’s market capitalization increased further in Q1 of 2017: on average, the global top 100 banks increased their market cap by 3.8% reaching EUR 5.4 tr—the highest level in recent years.
  •  After a very strong Q4 2016 with 17.2% TSR, global top 100 banks reached 4.8% in Q1 2017.

II. Economic environment and key banking drivers

  • The world economic climate and economic sentiment of the euro area continued their improvement in the first quarter of 2017.
  • The EURIBOR yield curve steepened slightly, while a second Fed interest rate increase lifted the USD LIBOR curve, most notably at the short end, thereby flattening the curve.

III. Capital increases in the European Banking sector—a question of confidence or price?

  • 2017 started with significant capital increases by UniCredit and Deutsche Bank—together totaling nearly EUR 21 bn, almost twice the total volume raised by all European banks during the past 3.5 years.
  • In chapter III, we analyze the environment of capital increases and the influence of confidence and price on the success of issuing new shares.

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