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Now Credit Suisse chief Tidjane Thiam sounds alarm on European banks

Hayley Kirton
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Credit Suisse chief executive Tidjane Thiam
Even the boss of Credit Suisse is concerned about the future of banks in Europe (Source: Getty)

Credit Suisse boss Tidjane Thiam has today become the latest in a list of names to warn Europe's banks are not in a healthy state.

His comments come as Deutsche Bank's share price is swinging widely as rumours circulate as to whether the German government would be prepared to bail out the lender. The German giant, which has market capitalisation of around just €15bn (£12.9bn), is also facing a record $14bn (£10.8bn) fine from the US Department of Justice for mis-selling mortgage-backed securities.

Now, speaking at a conference, financial sector veteran Thiam has warned Europe's banking sector faces a rocky future.

The Financial Times reported Thiam as saying the sector is in a "very fragile situation" where share prices swing drastically "on the basis of a relatively minor piece of news".

Read more: Why is Deutsche Bank in such trouble?

Yesterday, former chancellor of the exchequer Lord Lamont of Lerwick revealed he thought "the biggest threat to Europe is the banking crisis", and added the Italian and German lenders were the ones with the most problems.

On Monday, Deutsche Bank's share price tanked to €10.55, its lowest level since the 1980s, after reports emerged over the weekend that German Chancellor Angela Merkel was not prepared to offer the bank state assistance.

However, some well-timed comments yesterday from Merkel, which reinforced Deutsche's place as a key part of the German financial system, started to send shares back in the opposite direction.

Read more: Deutsche Bank: Where did it all go wrong?

Meanwhile, Die Zeit reported today that the German government was in the process of drawing up a rescue plan after all, even though this was later denied. This, along with the announcement the bank had agreed to sell British insurance business Abbey Life to Phoenix, has helped to boost Deutsche Bank's share price by 2.6 per cent to €10.82.

On the other side of the Alps, Italian lender Monte dei Paschi had many on the edge of their seats this summer as the bank received a rescue deal just days after the European Banking Authority stress tests revealed the bank would likely go bust in the event of a serious economic downturn.

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