LONDON: European banking shares took a pounding Thursday after British regulators ordered lenders to come clean on any links to the Panama Papers scandal and the ECB appeared comfortable with negative interest rates.
Overall the the major European share indices fell, with Frankfurt and Paris closing down around 1.0 percent and London 0.4 percent.
"UK banks were in the red, matching declines across Europe after ECB minutes reignited fears over negative rates, whilst an FCA deadline for reporting links to Panama and acquisitions in the insurance space by Lloyds were not being well received," CMC Markets analyst Jasper Lawler told AFP.
While ECB leaders were divided about stepping up asset purchases at their monetary policy meeting last month, the minutes of the meeting released Thursday showed there was broad support for pushing interest rates further if necessary.
The ECB's deposit rate was pushed down to -0.4 percent, meaning commercial lenders have to pay the central bank on unused funds at the end of the day they transfer to the ECB.
Negative interest rates are a growing headache for banks as they usually haven't been able to pass them along to customers.
Deutsche Bank shares fell 3.0 percent, while Societe Generale dropped 3.5 percent and BNP Paribas slumped 3.8 percent.
Meanwhile Britain's finance watchdog said Thursday that it has given banks and financial firms until next week to reveal whether they have any links to the law firm at the centre of the Panama Papers leak.
A spokesman for the Financial Conduct Authority (FCA) said it had written to about 20 companies asking to explain their relationship with Panama-based Mossack Fonseca by April 15.
The French regulator also asked the country's banks to provide information about their exposure to tax havens.
French newspaper Le Monde has reported that 365 banks across the world had used the services of Mossack Fonseca, including Britain's HSBC which created 2,300 offshore companies.
Shares in HSBC shed 0.9 percent, RBS dropped 1.0 percent, Barclays fell 1.6 percent and Lloyds tumbled 4.8 percent.
Shares in Lloyds were also hit by a report by Bloomberg that the bank is considering acquisitions to help expand its insurance business.
Shares in rival insurers Prudential dropped 2.3 percent, Old Mutual gave up 2.9 percent and Aviva slumped 4.5 percent.
Wall Street also pushed lower, with the major indices down around 1.0 percent in midday trading.
London - FTSE 100: DOWN 0.4 percent at 6.136,89 points (close)
Frankfurt - DAX 30: DOWN 1.0 percent at 9,530.62 (close)
Paris - CAC 40: DOWN 0.9 percent at 4,245.91 (close)
EURO STOXX 50: DOWN 1.6 percent at 2,863.48
New York - Dow: DOWN 0.9 percent at 17,565.32
New York - S&P 500: DOWN 1.0 percent at 2,045.39
New York - Nasdaq: DOWN 1.1 percent at 4,866.63
Tokyo - Nikkei 225: UP 0.2 percent at 15,749.84 (close)
Shanghai - Composite: DOWN 1.4 percent at 3,008.42 (close)
Hong Kong - Hang Seng: UP 0.3 percent at 20,266.05
Comments
Comments are closed for this article.