Financial institutions in London and across Europe have been hit hard by concerns about the US banking sector, leading to a plunge in stock markets.
On Thursday, the FTSE 100 dropped by 1.9%, while the domestically-focused FTSE 250 plummeted as much as 2%. This was triggered by a sharp fall on Wall Street.
As a result, Barclays shed as much as 6.1%, with HSBC down 5.3%, Lloyds off as much as 4.7%, and Natwest dropping as much as 4.5%.
The contagion spread to Europe, with Deutsche down 10% on German markets, and Societe Generale falling 5.5% after the Paris stock exchange opened. BNP Paribas shed 4.4%, and Credit Agricole tumbled 3.6%.
The cause of this decline was the announcement by SVB Financial Group, which specializes in venture-capital financing, that it had suffered significant losses on its portfolio, including US bonds and mortgage-backed securities. This has led to concerns about the wider sector, as bond values fall when central banks raise interest rates, which is happening worldwide to curb rising inflation.
Major US banks, including JP Morgan, Bank of America, Wells Fargo, and Citigroup, all suffered significant losses. These worries were exacerbated by the news on Wednesday that crypto banking giant Silvergate planned to close as the sector faces more turmoil.
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