Investor concerns about a potential banking crisis have caused Europe's banking stocks to tumble. The Stoxx Europe 600 Banks index, which tracks 42 large banks in the EU and UK, closed 3.8% lower, bringing the index down 18% from its peak in February. Deutsche Bank saw its shares drop by 14.5% before ending 8.5% lower, with UBS and Credit Suisse falling by 3.6% and 5.2%, respectively.
Deutsche Bank's five-year credit default swaps have also risen to their highest level since early 2019, trading at 208 basis points at midday ET. Concerns about the impact of rising rates on the wider economy and banks' balance sheets are also contributing to the decline.
While German Chancellor Olaf Scholz said there was no reason to be concerned about Deutsche Bank, some analysts suggest investors have been rattled by Deutsche Bank's announcement to pay back one of its bonds five years before its maturity date.