European banking shares fall as market jitters linger

European banking shares fell on Friday after market jitters about the health of the sector refused to go away.

Germany's Deutsche Bank fell 14%, while UBS, the Swiss bank that staged an emergency takeover of Credit Suisse last week, was down 7%.

Europe's Stoxx 600 banking index fell more than 5%, and the UK's banking index fell 4%.

Banks in London led the UK's blue-chip index lower, with Barclays down 6% and Standard Chartered and NatWest both off 5%. They helped to drag the FTSE 100 down by 1.8%.

Bill Winters, the chief executive of Standard Chartered said earlier on Friday that the decision to wipe out $17 billion 13.9 bn of risky Credit Suisse debt would have a profound impact on global banking regulations.

As part of the historic government-brokered takeover of Credit Suisse by its larger rival UBS, the Swiss regulator determined that $17 billion in additional tier 1 bonds held by investors would be wiped out.

The move spooked markets and caused a sell-off in other bank debt earlier this week, as investors tried to assess whether or not the same could happen to their holdings of AT 1 debt in other banks, a market worth more than $275 billion.

Winters spoke at a financial forum in Hong Kong and said that it had very profound implications for the regulation of banks and the way that banks manage themselves.

The issue isn't that the regulators don't have confidence in our solvency? In the past two weeks, two US regional banks, California-based Silicon Valley Bank and New York s Signature Bank, have collapsed because of heavy losses on their bond portfolios and a run on deposits by jittery investors.

After the biggest bank failure since 2008, HSBC moved to acquire the British arm of SVB in a 1 deal brokered by the government.

Wall Street companies including Bank of America, Goldman Sachs and JP Morgan agreed a $30 billion rescue deal last week to prop up the troubled mid-sized bank First Republic, although it may need more funding.