The FTSE-100 fell 3.8 per cent yesterday (March 15), with the German Dax falling 3.2 per cent and the CAC 40 dropping 3.6 per cent.
In the US, the S&P 500 fell 0.7 per cent and the Dow Jones was down 0.9 per cent, with Japan’s Nikkei 225 down 0.8 per cent.
The sell-off was triggered over concerns that the collapse of Silicon Valley Bank and ongoing troubles at Credit Suisse would lead to further contagion in the banking sector.
SVB was taken over by the US government last Friday after being unable to meet depositors’ demands.
The bank, whose main clients were tech start-ups, was taken over by the US Federal Deposit Insurance Corporation, an independent agency which aims to maintain financial stability and public confidence.
The bank’s UK arm, SVB UK, was bought by HSBC for £1 after talks between the Financial Conduct Authority, Prudential Regulation Authority, Financial Services Compensation Scheme and UK government went on overnight.
This was followed by a crash in the share price of Credit Suisse, days after it said its auditor had revealed “material weaknesses” in its financial reporting controls, leading to its annual report release being delayed.
The Swiss lender saw a further drop in share price after one of its biggest shareholders ruled out further cash stimulus, however this morning (March 16) its shares rebounded after it said it will borrow up to SFr50bn (£45bn) from the Swiss central bank.