Off the Charts: For Banks, Unfortunate Echoes of 2008

Then Lehman Brothers failed, and prices fell much more.

As the anniversary of that date approached, investors seemed to fear it might all happen again. By the end of this week, those same indexes were down about as much this year as they were at this point in 2008, and many bank stocks did even worse than they did in early 2008.

There is a circular logic to this year’s decline. In 2008, banks in many countries were rescued by governments. Now it is feared that banks may be in danger because some of the same governments may not be able to meet their obligations. That is particularly true in Europe, where bonds from several countries trade well below face value.

On Friday, Greece’s finance minister, Evangelos Venizelos, blamed “organized rumors” for renewed speculation that Greece would default, and said the country intended to comply with all terms needed for the bailout that European countries agreed to in July. But the fact that the details of the deal have yet to be locked down has unnerved some investors.

In a speech this week, Josef Ackermann, the chief executive of Deutsche Bank, said it was not justifiable for politicians to demand that European banks raise more capital, as Christine Lagarde, the head of the International Monetary Fund, had done. “It’s obvious,” he said, “that many European banks would not be able to handle writing down the sovereign bonds they hold on their banking books to market levels.”

But, he said, it would “risk undermining the credibility” of European bailout packages “if politicians were to now send out the signal that they do not believe in the success of those measures.” And, he argued, forcing banks to raise capital now would anger investors by forcing the dilution of current shareholders.

As can be seen in the accompanying charts, Deutsche Bank has lost more than two-fifths of its value this year, a performance that is better than that of some banks. Its shares are trading for about what they cost at the end of 2008, but they are less than half what they were worth just before the Lehman failure.

Of the 30 banks shown, only one — Standard Chartered of Britain — has a share price higher than it had on the eve of the Lehman collapse. Even so, its shares have lost nearly a quarter of their value this year.

Shares in Intesa Sanpaulo, an Italian bank, have lost half their value this year, and are trading for about one-quarter less than they did on March 9, 2009, when most financial stocks hit their credit crisis lows. UniCredit in Italy, Société Générale in France and Lloyds in Britain have also suffered badly this year, losing half or more of their value. Credit Suisse, in Switzerland, and Barclays, in Britain, have fallen almost as much.

Among the largest American banks, some of the worst performers have been those that were widely deemed to be too big to fail. Bank of America, troubled by its ill-fated acquisition of Countrywide Financial, is the worst performer so far in 2011, but Citigroup, Goldman Sachs and Morgan Stanley have done almost as poorly. Morgan Stanley’s share price is also a little below its March 9, 2009, level.

Floyd Norris comments on finance and the economy at nytimes.com/economix.

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