SHARES in major European banks slid again yesterday after confidence was shaken further in the global banking system, writes Scott Wright.

Barclays, HSBC, NatWest Group and Lloyds Banking Group all saw sharp falls after shares in Deutsche Bank plunged following reports that the cost of insuring against its default had increased.

Meanwhile, it emerged that UBS and Credit Suisse are among banks that will be investigated by the US Department of Justice over allegations they helped Russian oligarchs avoid sanctions imposed following the invasion of Ukraine. UBS rescued Credit Suisse in an emergency deal on Sunday.

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Yesterday’s turmoil comes amid a rocky period for the global banking system that began with the failure of Silicon Valley Bank, Silvergte and Signature Bank in the US earlier this month. HSBC took over the UK arm of SVB for £1 in a deal brokered by the UK Government and Bank of England to prevent contagion from the failure spreading to Europe. UBS took over Credit Suisse after concerns grew around the strength of its Swiss counterpart.

Susannah Streeter at Hargreaves Lansdown said: “Waves of bad news keep hitting the banking sector and the tide doesn’t look like it’s set to turn any time soon.

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“However, the European Central Bank has made it clear that it is standing by ready to deploy fresh tools to boost liquidity should the situation deteriorate and president Christine Lagarde has again reassured EU leaders in Brussels that the banking sector remains resilient with strong capital positions.

"The message from the Bank of England has been on repeat over the past fortnight. Although it’s monitoring the situation it’s stressing that there is still no systemic risk and that the UK banking system remains safe and sound.’’

The Bank of England and the US Federal Reserve  lifted interest rates this week amid continuing concern over inflation. Ms Streeter said the rises “could make a precarious situation worse for some smaller banks, particularly those sitting on large bond holdings which have lost value as monetary conditions have been dramatically tightened.”