The spotlight is back on the euro zone's financial sector after the region's central bank asked major Italian banks for information on their still-large portfolios of non-performing loans. Both the banks and Italian policymakers insisted that the request should not worry investors, but shares of Italian banks have slumped none the less. Since the start of the year, shares of Unicredit and Intesa Sanpaolo, Italy's two biggest banks by market capitalization, have declined by 43 percent and 28 percent, respectively.
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Over the past week, worries about banks across Europe have ramped up, in part due to the sector's exposure to slumping energy prices.
The co-CEO of Deutsche Bank, John Cryan, rushed on Tuesday to reassure investors and staff about the bank's stability, but his words only provided a temporary boost to the bank's falling stock.
"With the banking crisis of recent years still fresh in the memory, there are real fears that the banks face big challenges this year. Moreover, the euro zone recovery — what little we are actually seeing — could be threatened by any renewed weakening in the banking sector and drying up of credit," Craig Erlam, senior market analyst at Oanda, said in a research note on Tuesday.