Outbreak contagion hazmat

Shares across the European financial sector are getting pummelled on Friday as fears about the potential collapse of Germany’s biggest lender, Deutsche Bank, continue to grow.

Deutsche shares have collapsed this week, falling to several record lows, as investors start to fear that the bank could collapse under the weight of a proposed $14 billion fine from the US Department of Justice.

Bloomberg News reported last night that about 10 hedge funds have moved to limit exposure to the bank and have withdrawn funds, which caused Deutsche’s shares to plunge in US trade. That fall has continued on Friday, with the bank’s shares passing below €10 each for the first time in history in early trade in Frankfurt.

In turn, stocks across the board, but particularly in the financial services sector, are crashing lower on Friday. Around 10:50 a.m. BST (5:50 a.m. ET) the Stoxx index of European banking shares is off by roughly 3.4% as contagion from DB spreads to banks across the continent. Soon after markets opened at 8:00 a.m. BST (3:00 a.m. ET) the index fell almost 4% Here’s how that looks:

Screen Shot 2016 09 30 at 10.48.17

On a bank-by-bank basis, Deutsche is near the bottom of the pile, down more than 4% having dropped by 8% at one point, while Germany’s second largest lender, Commerzbank is the biggest faller, lower by almost 5.5%

Here’s the scoreboard from some of the continent’s other top banks:

  • Unicredit — down 4.22%
  • Societe Generale — down 3.18%
  • Credit Agricole — down 2.70%
  • Santander — down 3.52%
  • Barclays — down 2.24%
  • Royal Bank of Scotland — down 1.67%

However, it is not only the banking sector witnessing substantial losses on the day, with all of the continent’s major share indexes significantly lower on the morning. Peripheral indexes including the FTSE MIB in Italy, and IBEX 35 in Spain fell by as much as 2.5% soon after the open, although most indexes have now recovered a little. Here’s the scoreboard:

Screen Shot 2016 09 30 at 10.54.09

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