From The Wall Street Journal
Among recent concerns hitting European bank stocks is one that has been responsible for wider market mayhem for months: oil.
Global bank shares tumbled through much of last week as investors worried about world-wide economic growth, capital buffers and the effects of low and negative interest rates. But in Europe, another worry caught up with the banks as the price of oil plummeted.
Fears of energy-sector bankruptcies have long weighed on the U.S. banking sector, which financed the decadelong expansion of the shale industry. More recently, investors have asked about exposure in Europe, where it is less well documented.
Oil is causing other concerns for banks. The slide in crude prices has hit some of the emerging markets that many banks are exposed to. Meanwhile, cheap oil is feeding into low inflation, prolonging the era of low interest rates that is squeezing banks’ profits.
