On Thursday, Zions Bank said it would write off a $50m loss on two loans, while Western Alliance disclosed it had started a lawsuit alleging fraud.
“Pockets of the US banking sector including regional banks have given the market cause for concern,” said Russ Mould, investment director at AJ Bell.
“Investors have started to question why there have been a plethora of issues in a short space of time and whether this points to poor risk management and loose lending standards.”
“Investors have been spooked,” he added, saying that while there was no evidence of any issues with UK-listed banks, “investors often have a knee-jerk reaction when problems appear anywhere in the sector”.
Bank shares in Europe were also hit, with Germany’s Deutsche Bank down more than 5% and France’s Societe Generale dropping 4%.
Asian markets fell earlier on Friday. Japan’s Nikkei index closed down 1.4% and in Hong Kong the Hang Seng Index ended the day 2.5% lower.
But shares of some of the US banks hit hardest on Thursday appeared poised to claw back some ground.
In early morning trade on Friday, shares in Zions Bank were up about 2%, following its 13% fall on Thursday. Shares in Western Alliance Bancorp, which had dropped almost 11%, were also up roughly 2%.
