European banking shares dropped sharply on Friday over tough words and proposals from US President Barack Obama to crimp and curb US banks. Analysts warned of volatility as they tried to evaluate the effects of Obama's measures to restrict the scope and risk-taking of US banks.
Stock markets in general recoiled in uncertainty over the measures, and the price of shares in many leading European banks fell in a range of about 1.0-4.0 percent. In London, shares in Barclays bank slumped by 3.25 percent to 273.93 pence, having lost 5.93 percent late on Thursday.
Barclays has become a giant on Wall Street with the purchase in 2008 of the North American business of collapsed US investment bank Lehman Brothers, which was at the centre of the financial crisis as it spread into a global economic trauma. Analysts at CM-CIC bank in Paris commented that Obama's outlined legislation "will cause difficulties in valuing banks and will slow down reorganisation of the sector." Throughout 2010, regulatory issues would continue to "poison the sector," they said.
In London, RBS bank shares fell 0.77 percent to 35.05 pence, after shedding 7.05 percent on Thursday, and HSBC shares slipped 0.65 percent to 679.4 pence. But Lloyds Banking group gained 1.24 percent to 53.98 pence and Standard Chartered 0.07 percent to 1,431 pence.
In Germany, shares in the biggest bank, Deutsche Bank, fell by 2.93 percent to 45.67 euros. The overall DAX index was showing a fall of 0.38 percent. Commerzbank shares fell by 0.34 percent to 6.14 euros after having fallen by 3.81 percent late on Thursday. Postbank stock fell 0.77 percent to 21.83 euros. In Paris, BNP Paribas shares fell 1.70 percent to 52.66 euros, Credit Agricole 1.60 percent to 11.96 euros, and Societe Generale 1.76 percent to 43.89 euros.
Dexia bank shares lost 1.75 percent to 4.42 euros and Natixis 1.46 percent to 3.44 euros. And in Switzerland, stock in UBS bank declined by 3.73 percent to 14.96 Swiss francs. The SMI stock index was down 0.41 percent. Stock in Credit Suisse bank fell 4.23 percent to 48.17 francs. But shares in the third-biggest Swiss bank, Julius Baer which specialises in the management of private fortunes, rose by 1.60 percent to 36.20 euros.