Bridgewater, Millennium, and Marshall Wace in bearish bet on Europeans banks


By Nell Mackenzie and Pablo Mayo Cerqueiro

LONDON (Reuters) -Investment managers Bridgewater Associates, Millennium Management and Marshall Wace added to short positions on European banking shares after the collapse of Silicon Valley Bank sparked contagion fears across global banks, according to data from Breakout Point.

Hedge funds including Citadel, Wellington Management, Capital Fund Management and Odey Asset Management already had short positions, some long-standing, disclosed as of Feb. 15, said the data provider on Thursday.

Short selling involves borrowing shares from a broker to sell them, with the expectation of buying them back at a lower price to make a profit.

Short sellers had amassed bearish positions worth more than $15.7 billion against European banks by Tuesday, according to S&P Global Market Intelligence.


Millennium Management, Citadel, Wellington Management, Capital Fund Management, Odey Asset Management and Marshall Wace declined to comment. Bridgewater Associates said it would respond in due course.

Marshall Wace held the largest disclosed number of short positions against banks, public filings from Austria, Italy, Sweden, Britain, Spain and Poland analysed by Breakout Point showed. The banks included BAWAG, FinecoBank, Handelsbanken, CaixaBank, NatWest Group and PKO Bank Polski.

“With six big shorts, Marshall Wace holds, by far, the most disclosed banking shorts across Europe. They boosted a number of these shorts in recent weeks, generating some nice profits at their side,” said Ivan Ćosović, founder of data group Breakout Point.

Handelsbanken, Mediobanca, BNP Paribas, Credit Suisse, Close Brothers, Deutsche Bank were among financial firms that ended Tuesday with the highest proportion of shares on loan to short sellers, according to S&P Global Market Intelligence.

The 113 lenders tracked by the researchers saw an average increase of 5% of shares out on loan between March 10 and 14.

The data did not cover the plunge in Credit Suisse shares on Wednesday.

Traders with short positions on Credit Suisse could potentially have made month-to-date profits of up to $238.6 million and year-to-date profits of up to $192.4 million, data provider S3 Partners said on Wednesday, when the Swiss group’s shares plunged by as much as 30% after its top shareholder said it could not inject more capital into the bank.

Credit Suisse sought to shore up its liquidity and restore investor confidence on Thursday by borrowing up to $54 billion from Switzerland’s central bank. Its shares were up 18% at 1602 GMT, in a broader European banking index up 1.4%

In the week to Wednesday, some 120 billion euros had been wiped off the value of European bank shares.

The rout began after Silicon Valley Bank was forced to sell a portfolio of bonds at a loss to meet the demands of its customers who wished to withdraw funds, prompting fears of a liquidity crunch at other financial institutions.

($1 = 0.9501 euros)

(Reporting by Nell Mackenzie; Editing by Amanda Cooper and Mark Potter)