by Sruthi Shankar and Amanda Cooper

(Reuters) – Banking stocks were again rocked in Europe on Friday, especially Deutsche Bank and UBS, as investors feared the sector’s struggles for several days would also spread to its heavyweights.

The Stoxx banks index lost 4.93% around 10:20 GMT.

Among the biggest declines in the Stoxx 600 is Deutsche Bank. The first German bank is down 11.64% as a sharp increase in the cost of insurance against the risk of payment default fuels concerns about the stability of the entire European banking ecosystem.

Deutsche Bank’s five-year CDS climbed 200 basis points, the highest since early 2019, data from S&P Market Intelligence shows. On Thursday, it posted its biggest ever one-day rise, according to Refinitiv.

“Deutsche Bank has been in the spotlight for some time, the same way Credit Suisse has been,” said Stuart Cole, chief macroeconomist at Equiti Capital. “It has gone through several restructurings and management changes in an attempt to get back to a solid base, but so far none of these efforts seem to have really paid off.

In Zurich, Credit Suisse and UBS lost 6.64% and 6.4% respectively.

The Bloomberg agency reported that the two Swiss banks, which are in the process of being reconciled, are among the establishments targeted by an investigation by the United States Department of Justice to determine whether they potentially helped Russian oligarchs to evade sanctions.

Neither of the two Swiss banks wanted to comment on their information and the US Department of Justice did not immediately respond to a request for comment.

In Paris, Crédit Agricole, BNP Paribas and Société Générale drop from 3.68% to 7.14%.

The banking sector has been shaken globally since the sudden bankruptcies of two regional banks in the United States, which raised fears of wider contagion. Regulators, politicians and central bankers have insisted that the turmoil is quite different from the 2008 financial crisis, saying banks have stronger levels of capital and liquidity.

For the fourth time in a week, US Treasury Secretary Janet Yellen spoke on Thursday to try to reassure households – and markets – about the safety of the US banking system.

If his remarks allowed Wall Street to close higher on Thursday, the “futures” on indices are now in the red and the big banks like Goldman Sachs or JPMorgan are retreating in the forecourt exchanges.

(Sruthi Shankar and Reuters offices; writing by Toby Chopra, Laetitia Volga, editing by Kate Entringer)

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