Bad Loans, Fraud Allegations at US Banks Spark €37.4bn Euro Bank Rout

Allegations of fraud and reports of bad loans at two US regional banks sparked a massive €37.4 billion rout in the European banking sector. The panic, driven by fears of wider credit stress, sent global markets tumbling.
The trigger came from Zions Bancorporation and Western Alliance, which reported a combined $150 million in credit issues. This news, while small, revived memories of the 2023 SVB collapse and raised questions about the health of the financial system after a long period of high rates.
European lenders were hit hardest. Spain’s Banco Sabadell fell 6.78%, while Deutsche Bank and Barclays both shed around 6%. The FTSE 100, Dax, and other major indices all closed in the red.
Investors fled to safety, pushing gold to a new record of $4,378 an ounce, its biggest weekly gain since the 2008 financial crisis. The VIX “fear index” also surged, reflecting the deep nervousness in the market.