European Bank Stocks Are Getting Slammed

REUTERS/Alessandro GarofaloEurogroup President and Dutch Finance Minister Jeroen Dijsselbloem was just quoted by Reuters and the FT as saying that the Cyprus bank bailout deal agreed to last night – which includes a big hit on uninsured depositors at the two biggest Cypriot banks – will serve as a template for euro-area bank restructurings going forward.

European bank stocks have been falling all day on the news, but they've taken a leg lower since the Dijsselbloem comments hit the wires.

In Italy, shares of Intesa Sanpaolo are down 6.1 percent, Unicredit is down 5.9 percent, Ubi Banca is down 5.1 percent, and Banco Popolare is down 4.8 percent.

In Spain, Banco Popular Español is down 4.1 percent, Bankinter is down 4.0 percent, and Banco de Sabadell is down 3.8 percent.

The fear for those banks is that if the new approach is to "bail in" senior creditors in future restructurings – which may ultimately be necessary elsewhere in the euro area, as the sovereign debt crisis of the last few years has taken a serious toll on bank balance sheets – it will make it harder for banks to sell debt in the open market, thus increasing their cost of funding and bringing them under renewed pressure.