AFP, New York :
US and European banking shares took a pounding Thursday and dragged broader markets lower on signs of continuing weak interest rates and the collapse of a giant fee-spinning pharmaceutical merger.
Europe’s banks were hit after British regulators ordered lenders to come clean on any links to the “Panama Papers” scandal and the ECB appeared comfortable
with keeping interest rates negative, which pares away bank profits.
In New York, big finance houses also sold off on the prospects of a continuing dovish stance at the Federal Reserve, as depicted in the minutes of its last meeting released Wednesday.
And the collapse of the $160 billion Pfizer-Allergan merger, expected to generate hundreds of millions of dollars in fees, together with the government’s move to block the tie-up between oilfield giants Baker Hughes and Halliburton, lowered the prospects for investment banking profits.
Overall the major European share indices fell, with Frankfurt and Paris closing down around 1.0 percent and London 0.4 percent.
In New York the S&P 500 tumbled 1.2 percent and the Dow 1.0 percent.
Earlier, Asian shares were mixed, with Tokyo and Hong Kong managing small gains, Shanghai losing 1.4 percent and Mumbai down 0.9 percent.
The spark to bank share losses in Europe were the minutes of the European Central Bank’s last meeting, which showed policymakers committed to keeping interest rates negative.
Negative interest rates are a growing headache for banks as they usually haven’t been able to pass them along to customers, pinching their business margins.
On top of that, said CMC Markets analyst Jasper Lawler, an order by the British Financial Conduct Authority for banks to reveal by next week any links to the law firm behind the Panama Papers trove of shell company records was “not being well received.”
The French regulator also asked the country’s banks to provide information about their exposure to tax havens.
Deutsche Bank shares fell 3.0 percent, while Societe Generale dropped 3.5 percent and BNP Paribas slumped 3.8 percent.
Shares in HSBC shed 0.9 percent, RBS dropped 1.0 percent, Barclays fell 1.6 percent and Lloyds tumbled 4.8 percent.
US and European banking shares took a pounding Thursday and dragged broader markets lower on signs of continuing weak interest rates and the collapse of a giant fee-spinning pharmaceutical merger.
Europe’s banks were hit after British regulators ordered lenders to come clean on any links to the “Panama Papers” scandal and the ECB appeared comfortable
with keeping interest rates negative, which pares away bank profits.
In New York, big finance houses also sold off on the prospects of a continuing dovish stance at the Federal Reserve, as depicted in the minutes of its last meeting released Wednesday.
And the collapse of the $160 billion Pfizer-Allergan merger, expected to generate hundreds of millions of dollars in fees, together with the government’s move to block the tie-up between oilfield giants Baker Hughes and Halliburton, lowered the prospects for investment banking profits.
Overall the major European share indices fell, with Frankfurt and Paris closing down around 1.0 percent and London 0.4 percent.
In New York the S&P 500 tumbled 1.2 percent and the Dow 1.0 percent.
Earlier, Asian shares were mixed, with Tokyo and Hong Kong managing small gains, Shanghai losing 1.4 percent and Mumbai down 0.9 percent.
The spark to bank share losses in Europe were the minutes of the European Central Bank’s last meeting, which showed policymakers committed to keeping interest rates negative.
Negative interest rates are a growing headache for banks as they usually haven’t been able to pass them along to customers, pinching their business margins.
On top of that, said CMC Markets analyst Jasper Lawler, an order by the British Financial Conduct Authority for banks to reveal by next week any links to the law firm behind the Panama Papers trove of shell company records was “not being well received.”
The French regulator also asked the country’s banks to provide information about their exposure to tax havens.
Deutsche Bank shares fell 3.0 percent, while Societe Generale dropped 3.5 percent and BNP Paribas slumped 3.8 percent.
Shares in HSBC shed 0.9 percent, RBS dropped 1.0 percent, Barclays fell 1.6 percent and Lloyds tumbled 4.8 percent.
