Banking shares have fallen sharply again as investors remain nervous following the collapse of Silicon Valley Bank (SVB) in the US last week.
The failure of SVB has raised fears that other banks could also be facing problems.
Shares in Swiss banking giant Credit Suisse hit a new low after they plunged by 20%.
The fall came after Credit Suisse’s largest investor said it could not give the bank any more financial help.
Share indexes across Europe – including the UK’s FTSE 100 – were down by about 2.5% by mid-morning.
The FTSE 100 has fallen 6% in the past week to reach a three-month low.
“Investors remain nervous about what might be lurking in the shadows,” said Russ Mould, investment director at AJ Bell.
“It’s no wonder that investor sentiment remains cautious towards the big banks given that credit agency Moody’s downgraded its outlook on the US banking system to ‘negative’.”
Credit Suisse’s shares slumped after it revealed on Tuesday that its auditor, PwC, had identified “material weaknesses” in its financial reporting controls.
That prompted major investor the Saudi National Bank to say it would reject calls to inject further funds into the Swiss lender.
The wider problems in the banking sector began last week with the collapse of SVB, the US’s 16th-largest bank.
The bank – which specialised in lending to technology companies – was shut down by US regulators on Friday in what was the largest failure of a US bank since 2008.
SVB’s UK arm was snapped up for £1 by HSBC. (BBC)