European bank shares tumbled on Friday in the wake of a dramatic sell-off in U.S. bank stocks amid spreading jitters about the sector’s vulnerability to the rising cost of money.
The global rout in bank stocks was prompted by Silicon Valley Bank, a major banking partner for the U.S. tech sector, being forced to raise fresh capital after losing $1.8 billion selling a package of bonds to meet depositor demands for cash.
Neil Wilson, Chief Market Analyst at Markets.com, said that the episode could be the “straw that breaks the camel’s back” for banks after worries about ever higher interest rates and a fragile U.S. economy.
Europe’s STOXX banking index (.SX7P) fell more than 4% and was set for its biggest one-day slide since early June, with declines for most major lenders, including HSBC (HSBA.L), down 4.5%, and Deutsche Bank (DBKGn.DE), down 7.9%.
Shares in Italy’s UniCredit (CRDI.MI) and Intesa Sanpaolo (ISP.MI) also fell sharply.
Although many analysts did not see a systemic threat to the global banking system, the negative effects for lenders of higher central bank interest rates was now being felt.
This report’s information was first seen on REUTERS; to read more, click this link.
