Banking stocks are getting pounded

European banking stocks are taking a hammering on Friday, as investors react to the news that the US Department of Justice is seeking a $14 billion (£10.4 billion) settlement with Deutsche Bank over mortgage-backed security sales related to the financial crisis of 2007-08.

Deutsche crashed 8% at the market open on Friday morning, and that has dragged down shares of other lenders across the continent.

The STOXX Banking Index, which tracks Europe's biggest banks, is down by around 1.9% at 11:10 a.m. BST (6:10 a.m. ET), reflecting a general worry in the markets about the outcome of Deutsche Bank's fine, and what it will mean for the wider sector. Here's the chart:

Most of Europe's biggest lenders have seen substantial drops so far on the day, with British banks looking particularly shaky. Here are some of the most significant moves:

• RBS - down 4.3%
• Standard Chartered - down 3.1%
• Barclays - down 2.7%
• Credit Suisse - down 5.4%
• UBS - down 2.7%
• UniCredit - down 3.6%
• Commerzbank - down 1.6%

Mike van Dulken of Accendo Markets noted earlier on Friday, that the close ties between Europe's banks mean that the bad news for Deutsche is bound to have a knock-on impact, arguing: "This is never good news for a sector so intricately linked, especially when aimed at making an example of Europe's largest (it's almost equivalent to its market cap!), suggesting that an end to all those years of litigation is a way off yet."