The pan-European banking industry saw €37.4 billion (£32bn) wiped from its value as a credit scare originating in the US rattled global investors. Major lenders like Barclays, Deutsche Bank, and Banco Sabadell all saw their shares plunge by around 6%.
The catalyst for the rout was news from two US regional banks. Zions Bancorporation announced a $50m write-off, while Western Alliance reported a $100m bad loan, with one case linked to alleged fraud. Their shares dropped over 9%.
The anxiety quickly spread from Wall Street to Asia and Europe. Japan’s Nikkei fell 1.6%, Hong Kong’s Hang Seng dropped 2%, and major European indices like the FTSE 100 and Germany’s Dax posted significant losses.
The episode sparked fears of a repeat of the 2023 SVB crisis, with investors questioning the health of the financial system in a high-rate environment. This “flight to safety” sent gold to a new record high and caused the VIX “fear index” to surge.