European bank stocks sink as fear returns | CNN Business

London
CNN
 — 

Europe’s banking stocks tumbled Friday in a sign that investors are still nervous that the recent crises at some banks could spill over into the wider sector.

Europe’s Stoxx Europe 600 Banks index, which tracks 42 big EU and UK banks, fell 5% in morning trade. The index is down 19% from its high in late February. London’s bank-heavy FTSE 100 index dropped 2%.

Shares in Germany’s Deutsche Bank

(DB) plunged 13.6%, while shares in UBS

(ACPTX) and Credit Suisse

(AMJL) slid 7% and 7.4% respectively Friday, following falls of 4.3% and 3.6% on Thursday.

Last week, Switzerland’s biggest bank UBS bought its embattled Swiss rival for 3 billion Swiss francs ($3.25 billion) in an emergency takeover brokered by the Swiss government.

That helped restore some calm to markets rattled by the failure earlier this month of two US regional banks. But investors were on edge again Friday.

The falls in UBS and Credit Suisse come after Bloomberg reported Thursday that the US Department of Justice (DOJ) was investigating whether their staff had helped Russian oligarchs evade Western sanctions.

The DOJ had sent subpoenas to those employees before UBS took over Credit Suisse, according to the report.

Employees at some major US banks are also part of the probe, Bloomberg said.

“Contagion fears are not yet going away — bank shares are lower again this morning and weighing on broader sentiment. Yesterday we witnessed Deutsche Bank credit default swaps blow out,” Neil Wilson, chief markets analyst at trading platform Markets.com, said in a note Friday.

US futures were also down in premarket trade, with the Dow falling 0.78%, the S&P 500 0.61% and the Nasdaq Composite 0.3%.

— This is a developing story and will be updated.