U.S. President Joe Biden pledged on Monday to do whatever was needed to address a banking crisis threatened by the collapses of Silicon Valley Bank (SIVB.O) and Signature Bank (SBNY.O) which forced regulators to step in with emergency measures.
Biden's address came after weekend moves by the United States to guarantee deposits at collapsed tech-focused lender SVB failed to reassure investors about the health of other banks around the world.
Europe's STOXX banking index (.SX7P) fell 5.8% on Monday and was on track for its biggest two-day fall since March 2022, soon after Russia invaded Ukraine. Germany's Commerzbank (CBKG.DE) fell as much as 12.7%, while Credit Suisse (CSGN.S) hit a new record low after falling more than 15%.
Biden said his administration's rapid action over the weekend should give Americans confidence that the U.S. banking system is safe, adding that he was going to ask Congress and regulators to strengthen bank rules.
"Americans can have confidence that the banking system is safe. Your deposits will be there when you need them."
U.S. bank shares had declined in pre-market trading, with Bank of America (BAC.N) down 3.7%. Smaller lenders remained under pressure with privately owned First Republic Bank (FRC.N) plunging around 60% and PacWest (PACW.O) down around 40%.
In the money markets, a closely-watched indicator of credit risk in the U.S. banking system edged up, as did other indicators of credit risk in the euro zone. Europe's volatility index (.V2TX) jumped to its highest level since October 2022.
Reuters
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