Nearly £11bn was wiped off the value of the UK’s five largest listed banks, and €37.4bn from the wider European sector, as fears over US bad loans went global. Barclays was the worst hit in London, falling nearly 6%.
The panic started in the US with Zions Bancorporation and Western Alliance. The two regional banks revealed combined credit issues of $150 million, one involving alleged fraud. Their shares plunged, sparking a Wall Street sell-off that spread to Asia and Europe.
Major European indices, including the FTSE 100 and Germany’s Dax, fell sharply. The losses in the banking sector were particularly severe, with Deutsche Bank and Banco Sabadell shedding 6% and 6.78% respectively.
This news raised the specter of the 2023 SVB crisis, with investors questioning credit quality after a long period of high rates. In a classic flight to safety, gold prices surged to a record $4,378 an ounce, and the VIX “fear index” spiked.
Billions Wiped Off Banks as US Loan Fears Go Global
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