Reuters: Hot Stocks: Europe banks dip 2 percent on Cyprus contagion fear

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Europe banks dip 2 percent on Cyprus contagion fear Mar 18th 2013, 08:38 LONDON, March 18 | Mon Mar 18, 2013 4:38am EDT LONDON, March 18 (Reuters) - European bank shares fell more than 2 percent on Monday as a plan by Cyprus to seize money from bank deposits raised fears savers elsewhere may not be safe and the euro zone crisis could flare again. Bail-outs in Greece, Ireland, Spain and Portugal have not imposed losses on small depositors and savers there should be safe, but the move in Cyprus over the weekend sets a worrying precedent, analysts said. "We see no reason why depositors in any of these countries should fear bail-in (suffer losses), today. However, in the event...the peripheral economies require additional capital, the risk is that a precedent has been set," said John-Paul Crutchley, banking analyst at UBS. By 0820 GMT the STOXX Europe 600 banking index was down 2.3 percent at 170.4 points, its lowest level for two weeks. Banks in Spain and Italy were hard hit, with Unicredit down 4.7 percent and Intesa Sanpaolo, Santander and BBVA all down more than 3 percent. France's BNP Paribas PA> and SocGen were each down 4 percent. Britain's Barclays was down more than 3 percent. Investors across Europe were spooked by news that Cyprus would force all depositors to take a loss as part of a 10 billion euro ($13 billion) bailout, breaking with previous practice that depositors' savings were sacrosanct. "The contagion from Cyprus is fairly limited but there is a tail risk that this measure could backfire. Solvency and liquidity risk are back on investors' agenda," said Eleni Papoula, analyst at Berenberg Bank. (Reporting by Steve Slater; Editing by Anthony Barker) Link this Share this Digg this Email Reprints

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