Banks' pain amid crisis fears

High street banks led further punishing share losses on global markets on worries the sector is heading for another crisis.

UK blue chip banks players were heavily in the red, with Barclays down 4% and Lloyds Banking Group and fellow State-backed lender Royal Bank of Scotland both down more than 2%.

London’s wider FTSE 100 Index was also seeing steep falls in volatile trading that saw it shed 1.6% at one stage, before clawing back to stand 0.6% lower, while it was a similar picture in Germany and France where the Dax and Cac 40 fell 1% and 2% respectively.

Spooked investors have been ditching bank shares in recent weeks amid anxiety the sector could see a repeat of the 2008 meltdown due to the slowdown in China, wider global economic woes and the falling price of oil.

Rock bottom interest rates - and even negative interest rates in a growing number of countries - have added to concerns that banks are vulnerable.

Independent financial analyst Louise Cooper of CooperCity said bank share falls are “beginning to look ugly”.

She said: “Markets are telling us that banks from all over the world - highly sensitive to economic conditions - are in trouble.”

Barclays suspended its shares on Monday due to volatile trading, closing down more than 5% in a dismal session for the wider FTSE 100 Index, which fell 2.7%.

Deutsche Bank fared even worse in Monday’s sell-off, down 9%, and its embattled new CEO John Cryan moved to reassure investors and employees on Tuesday that the German lender is “rock-solid”.