As Turkey Crisis Mounts, Contagion Jitters Hit Global Banks
- Higher default risks, weakening currencies pummel bank stocks
- BBVA, UniCredit and Citigroup are among the worst-hit lenders
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Turkey’s crisis is quickly reverberating through global banks, cutting stock prices for lenders with even little to no direct exposure, as investors worry about the unknown paths that contagion could take through the financial system.
The main concern is that European lenders, which have been looking to emerging markets as rich sources of growth, may get squeezed by turmoil breaking out in both Turkey and Russia, as the U.S. ratchets up sanctions. Their weakening currencies and the mounting potential for loan defaults there hammered shares of lenders including Spain’s Banco Bilbao Vizcaya Argentaria SA, Italy’s UniCredit SpA and Dutch-based ING Groep NV.