Major European banks, including Barclays and Deutsche Bank, led a €37.4 billion rout in the pan-European banking sector amid fresh scares over credit quality in the US. Barclays shares closed down nearly 6%, while Deutsche Bank also shed 6%, alongside a 6.78% drop for Spain’s Banco Sabadell.
The panic originated from two US regional lenders, Zions Bancorporation and Western Alliance, which reported significant issues with bad loans. Their shares plunged, sparking fears of a wider problem in the private credit market.
This anxiety triggered a global sell-off. European indices like the FTSE 100 and Germany’s Dax fell over 1%. In Asia, Japan’s Nikkei 225 dropped 1.6%, and Hong Kong’s Hang Seng fell 2%.
The sudden stress test revived memories of the 2023 SVB collapse. Investors, fearing a new crisis, fled to safety. Gold prices surged to an all-time high of $4,378 an ounce, and the VIX volatility index—the “fear gauge”—spiked to its highest level since April.