As worries mount, European banks face sell-off more savage than 2008

Tue Feb 9, 2016 2:06pm EST
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By Sinead Cruise and Richa Naidu

LONDON (Reuters) - Big European bank stocks, mired by a seemingly endless list of investor concerns, are being sold-off more brutally than they were at the start of the financial crisis in 2008.

Europe's lenders have lost nearly a quarter of their value - over $240 billion - since the start of the year, faced with the reality that spiraling macro-economic worries could undo eight years of cost cuts, safer balance sheets and risk averse strategies.

Slumping oil prices, soaring technology costs, a slowdown in China - and the global market volatility that has followed - are just a few of many factors making investors jittery about banks.

There are also fears that the industry is undercapitalised for bad debt, and that negative interest rates will soon gut net interest margins and force lenders to charge for deposits.

Higher shareholder returns seem all-too-distant if banks have so many hurdles to overcome.

"There are no buying signals in the banking sector. Why own them?" Neil Dwane, global strategist at Allianz Global Investors, said.

Deutsche Bank (DBKGn.DE: Quote), UniCredit (CRDI.MI: Quote) and Credit Suisse CSGN.VX have each seen share slides twice as bad as they were from the new year until Feb. 8, 2008.

ING ING.AS and Nordea Bank (NDA.ST: Quote), down 21 percent and 15 percent respectively, are the only banks among Europe's top 15 with share declines less steep than the same period eight years ago.   Continued...

A styrofoam bull figure lies on its side on a counter in front of the German share price index DAX board at Frankfurt's stock exchange in Frankfurt, Germany January 7, 2016. REUTERS/Kai Pfaffenbach