zeb/market flash (Issue 3 – October 2012)

Global economic climate

• The global economic environment got worse as GDP growth rates and forecasts declined around the globe
• ECB support promote Western European sovereign CDS spreads significantly – decline of 50% within one quarter only

Key banking drivers

• In Q3 2012, market volatilities and uncertainties clearly calmed down – the euro recovered moderately
• The interbank funding situation improved considerably with positive effects on the banks’ margins

State of the banking industry

• Central bank support in Europe and the US boosts banks’ equity performances in these regions with double-digit TSR figures outperforming BRICS countries in Q3 2012
• Impact also visible on debt side as average CDS spreads of banks declined significantly and series of rating downgrades was brought to an end despite weaker economic conditions