AI Summary
5 min readCoronavirus and the new oil price war
This final episode of FT Banking Weekly arrives in the middle of a market storm. Global share prices plunged on Monday after Saudi Arabia launched an oil price war on top of an already escalating coronavirus crisis. Wall Street's S&P 500 fell 7% shortly after the opening bell, triggering a circuit breaker meant to curb panic selling. London's FTSE 100 dropped 6%. Markets rebounded Tuesday, but the damage to bank stocks was severe: shares in JPMorgan, Bank of America, and Citigroup all fell 10% on Monday, while European lenders Société Générale, Deutsche Bank, and UniCredit fell by even greater margins.
Why bank shareholders are panicking
Bank shareholders have already endured years of ultra-low or negative interest rates and weak investment banking revenue as Wall Street dominates European rivals. Now they face two fresh shocks. The coronavirus is slowing economic activity and dealmaking, while the Saudi-Russia oil price war has driven crude prices to their lowest since 2016.
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What you'll learn
- 1 (00:27) **Introduction & Episode Overview** - Host Matthew Vincent introduces the final episode of Banking Weekly, covering coronavirus, the oil price war, RBS, and the Bob Diamond/Rich Richie reunion.
- 2 (02:06) **Market Chaos: Coronavirus & Oil Price War** - Global markets plunge as the coronavirus outbreak and a new Saudi-Russia oil price war create a "double hit" for banks.
- 3 (03:29) **Why Bank Shareholders Are Panicking** - Stephen Morris explains the specific fears driving the sell-off in bank stocks.
- 4 (05:04) **The Fear of Widespread Defaults** - The potential for interest rate cuts, a slowdown in M&A, and collateral calls are compounding the sector's woes.
- 5 (06:33) **Banks' Operational Challenge: Working from Home** - Laura Noonan reports on the logistical and regulatory hurdles banks face in enabling remote work during the pandemic.
- 6 (08:21) **Regulatory Flexibility & Testing** - Regulators are encouraging preparation but have not yet issued blanket relaxations of compliance rules.
- 7 (11:39) **RBS: Retail Bank Under Pressure** - The state-backed lender faces unique challenges from coronavirus, including ensuring customer access to cash and managing its path back to full private ownership.
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Show Notes
How are banks dealing with the market chaos caused by coronavirus and the new oil price war? Also, Bob Diamond has appointed his flamboyant former right-hand man at Barclays, Rich Ricci, as chief executive of Panmure Gordon, the lossmaking UK stockbroker he bought two years ago. What are the two musketeers now up to? And we also hear from special guest Katie Murray, chief financial officer of RBS.
Contributors: Host, Matthew Vincent, regulation correspondent, Stephen Morris, European banking correspondent, Laura Noonan, US banking editor, and Nicolas Megaw, retail banking correspondent. Producers: Andrew Georgiades and Breen Turner.
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