World Business

Europe banks slide on Greek woes, US probes

(Agencies)
Updated: 2010-05-14 17:34

LONDON/MADRID - European bank shares fell over 3 percent on Friday as renewed concerns about losses from exposures to Greece and a widening of probes by US authorities unsettled investors.

Spanish banks led the drop amid fears Greece's problems could spread, despite a record bailout package, and that austerity plans will hurt economic growth. Dealers also cited talk of a levy possibly being imposed on banks in Portugal or Spain.

"Portugal raised the spectre of a bank levy after it announced more austerity measures yesterday and there is now the concern that Spain could do this as well, with the government being pressured by the unions to take the focus off cutting the public sector wages and hitting the fat companies and the wealthy," Renta 4 analyst Nuria Alvarez said.

By 0830 GMT Santander shares were down 5.5 percent and BBVA dropped 4.6 percent.

French banks sagged as they have the biggest exposures to Greece, and Credit Agricole and Societe Generale were each down over 4 percent.

Deutsche Bank CEO Josef Ackermann raised the prospect that lenders will have to take haircuts on their exposures after casting doubt on Greece's ability to repay its debt in an interview late on Thursday.

Meanwhile, US prosecutors are conducting a broad criminal investigation of six banks, including Deutsche Bank and UBS, according to a source, and in a separate probe New York's Attorney General served subpoenas on lenders including UBS, Deutsche, Credit Agricole and Credit Suisse, according to another source.

The probes add to concerns the industry is in the firing line as regulators scrutinise past practices, dealers said.

Deutsche, UBS and Credit Suisse shares all fall about 3 percent, in line with a 3.3 percent drop by the European bank sector.