Europe’s biggest banks turmoil can hurt the financial institutions in the United States. The signs can easily be seen in Stock market, where many bank shares dropped down again. Citigroup sinks down to 10.5% where as Bank of America dropped down to nearly 11%. The fall in Morgan Stanley was 9.7 percent whilst Golden Sachs was down to 10%.
Ever since this year started the fall of the bank stocks have been more than 30%. This uneven change has been the most in the last week. It is expected that the toll of the fragile economy will be seen on the business and reduced earnings.
But what have been more worrying are the European banks which are the force behind the most recent wave of selling. On Wednesday 14.7% fall was seen on Société Générale’s share price, which is the most by any European bank. But its chief executive is still denying the truth after the shocking fall.
Not only Société Générale but also other major European banks were also affected. Italian bank Intesa Sanpaolo saw a decline in 14% where as AXA Financial and Crédit Agricole of France took a fall of almost 10% apiece.
Alex Roever, JPMorgan Chase, head of short-term fixed income said, the European situation is back and isn’t going away it continues to keep pressure on the market.
Financial institutions have vast holdings of corporate and government bonds from Spain and Italy. Uncertainty over the economic health of European banks are compelling investors to take off their shares and increasing their borrowing price.
