EU on brink of RECESSION: Now French bank shares plummet 12 per cent in A DAY
FRANCE could tip the ill-fated eurozone into recession as one of country’s biggest bank watched its share price sink by as much as 12 per cent in yesterday's trading.
Investors dumped stocks in Societe Generale after the firm failed to meet analyst income targets in its latest quarterly results fuelling fears of an imminent European banking crisis.
Britain is feeling the impact as the FTSE 100 fell to its worst level in more than four years, dropping by nearly three per cent.
Societe Generale, which also had to put aside £300million (€400m) to deal with prospective fines and legal costs yesterday, is the latest firm to suffer heavy sell-offs in the European banking sector
France and Germany's top stock markets were yesterday down by more than three and two per cent respectively.
Germany's flagship bank Deutsche saw another seven per cent dive in its share price, despite just the firm's chief executive insisting just two days ago that its balance sheet is 'rock solid'.
Summarising yesterday morning's trading Connor Campbell, financial analyst at SpreedEx.com, said: "The blood of European banks drowns markets this Thursday morning.
"Whilst not quite at the morning’s truly alarming nadir the European indices are nevertheless caught in an ugly downward spiral led by the panic-ridden, and increasingly bloodless, banking sector."
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Investors are particularly concerned about the impact of negative rates, which hits banks ability to make profits they earn money by lending.
And Sweden helped escalate fears today after the country's central bank slashed its interest rates further into negative territory.
Analysts say that should the European Central Bank cut interest rates further into negative territory next month.
On top of this the firms are facing low economic growth - it's predicted eurozone growth is to come in at just 0.3 per cent for the final three months of 2015 in data later this week.
And there are also worries about the amount of 'bad loans' on banking books to sectors such as the energy industry, which has become distressed off the back of falling oil prices.
In some markets, bad loans are already piling up - or have not been dealt with effectively since the global financial crisis.
In Italy, banks are estimated to hold some €350 billion in soured loans, or more than 30 per cent of the eurozone's total.
The Government is desperately trying to mop up those bad loans, but the banks are seeing their shares slide in the meantime.
