ECB cuts interest rates again
European Central Bank President Jean-Claude Trichet delivers a speech in front of members of the European parliament -- January 13, 2009.
TEXT OF STORY
Bob Moon: The European Central Bank cut interest rates by half a percentage point to 2 percent this morning. From London, Marketplace's Steven Beard reports that's not offering the markets much reassurance.
Stephen Beard: The banks are in trouble, and we're not just talking about the woes of Citigroup and Bank of America. Some of Europe's biggest financial institutions are reeling.
This week, the bad news has been unremitting. The profit warning from the mighty Deutsche Bank sent shock waves across the continent. So did the forecast that HSBC will need a cash injection of $30 billion. Further big job losses at Barclays have piled on the misery.
David Buik of the BGC group says all this is having a predictable effect on bank shares:
David Buik: We've seen in a period of just over a week valuations of these banks right across the spectrum and right across the world fall dramatically. There is a perception overall now, I'm afraid, that the banking sector does require fresh capital.
And he says with investors scrambling to get out of bank shares, that capital will almost certainly have to come from taxpayers.
In London, this is Stephen Beard for Marketplace.