European bank stocks are getting destroyed

European banking stocks are taking a pounding again on Thursday, as yesterday’s brief rally in the markets evaporates.

A couple of hours after the open all of Europe’s biggest share indices are in the red, with most seeing losses of more than 2.5%. And as with most days in the past couple of weeks, the losses are being led by the biggest banks on the continent.

On Wednesday, European markets surged, with banking stocks leading the way, but that rally now looks to be little more than a dead cat bounce, with investor fears about the global economy, and worries of a new banking crash returning, thanks in some part to so-called coco bonds, which Business Insider’s Oscar Williams-Grut explained earlier on Thursday morning.

Fear in the global markets was exacerbated on Wednesday evening when US Federal Reserve chairman Janet Yellen spoke to congress, and hinted that the volatility of assets right now could lead to the Fed cutting its base interest rate, just a couple of months after raising it for the first time since the financial crisis.

Along with general jitters in the global markets and Yellen’s comments, a big cut in Sweden’s central bank rate has renewed fears about the impact that negative interest rates are having on the profitability of the big banks. On Thursday morning, the Riksbank came out with a larger than expected cut to its core interest. The bank was expected to bring rates down from -0.35% to -0.45%, but surpassed forecasts and cut to -0.5%.

The market fears mean that pretty much every single European state at least one or two of the biggest banks are severely down, and you’d be hard pushed to find any that are trading in positive territory this morning. Here’s the banking scoreboard earlier this morning:

  • Germany — Commerzbank; down 5.78%. Deutsche Bank; down 6.25%.
  • France — Societe Generale; down 12.84%. Credit Agricole; down 6.08%.
  • Switzerland — Credit Suisse; down 6.70%. UBS; down 5.94%.
  • Italy — Mediobanca; down 7.98%. UBI Banca; down 15.48%.
  • Britain — RBS; down 4.23%. Barclays; down 4.47%.
  • Spain — Santander; down 5.37%. Banco Popular; down 5.60%.

Overall, the STOXX banking index, which tracks the largest lenders in Europe, is down nearly 7% on Thursday morning, and is still sliding. That fall extends the index’s losses since the start of the year to 27%, and to more than 30% since the week before Christmas 2015. Here’s how that looks:

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