CDSs on US banks widen

The cost of credit protection on US banks increased this morning, having fallen - in some cases by as much as 50 basis points - on Friday after the announcement of the US government's stress-test results last week.

Five-year senior credit default swap (CDS) spreads referencing Citi -which will have to raise a further $5.5 billion in capital, according to the results - pushed out from yesterday's close of 349bp to 370.7bp as of 3:35pm BST, according to data provided by credit information specialist CMA Datavision.

Bank of America - which will require an additional $33.9 billion - saw its CDSs widen to 191.6bp from 177.6bp. CDSs on Wells Fargo - which needs $13.7 billion - moved out from 136.8bp to 145.2bp. Spreads referencing Morgan Stanley - which must raise $1.8 billion - widened from 241.6bp to 275.5bp. JP Morgan, along with Goldman Sachs, will require no further capital. It saw its CDSs move out to 127.7bp from 116.4bp. Spreads referencing Goldman Sachs pushed out to 180.3bp from 170.2bp.

The cost of credit protection on most European institutions also increased today. Lloyds TSB was the biggest mover, with CDSs referencing the bank widening to 155bp from 147.2bp. Royal Bank of Scotland also saw its CDSs move out to 150bp from 145.7bp.

In France, spreads referencing BNP Paribas widened to 75.3bp from 70bp. CDSs on Société Générale moved out to 94.9bp from 90bp.

Swiss bank UBS saw its CDSs push out to 148.8bp from 143.8bp. Meanwhile, local rival Credit Suisse was an exception to the rule, with CDSs referencing the bank tightening from 127bp to 124.2bp.

In Germany, CDSs on Deutsche Bank widened to 101.5bp from 97.2bp, while spreads referencing Commerzbank moved out from 102.5bp to 106.9bp.

Elsewhere, the cost of credit protection on Irish financials decreased in today's trading. CDSs on Anglo Irish Bank tightened from 533bp to 452.7bp. Allied Irish Banks saw its CDSs narrow from 303.1bp to 283.2bp. CDSs on Bank of Ireland moved in from 308.4bp to 286.6bp. Spreads referencing Irish Life & Permanent moved in from 312.2bp to 268.9bp.

See also: Stress test results boost CDSs on financials