Banks' pain amid crisis fears

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”.