European Banks Fall but This Time, Cyprus Isn't The Culprit

Alessia Pierdomenico | Bloomberg | Getty Images

Pier Luigi Bersani

Ouch! There is serious damage accumulating in European banks, with many down 2 to 3 percent again today. Just in the last month alone:

Italy:

Banco Popolare -26 percent

Unione di Banche -22 percent

UniCredit -17 percent

Banca Monte Dei Pasch -14 percent

Intesa San Paolo -11 percent

Spain:

Bankia -45 percent

Banco Popular -14 percent

Banco de Sabadell -14 percent

Banco Santander -11 percent

BBVA -10 percent

France:

CreditAg -16 percent

SocGen -15 percent

Greece:

Alpha Bank -31 percent

National Bank -31 percent

This is causing damage in southern tier stock markets this month:

Germany 0.7 percent

UK -0.1 percent

France -1.0 percent

Portugal -2.5 percent

Italy -4.2 percent

Spain -4.4 percent

Greece -16.9 percent

Europe weak, euro falling to lowest levels since November, as Italy's effort to form a government stalls. Yet at least for today, Cyprus can't be fingered as the culprit.

The head of Italy's largest party, Pier Luigi Bersani, seems unable to form a coalition government this week, soItaly's political stalemate — already a month old — will continue.

Mr. Bersani said only an insane person would want to govern Italy now. Would that include erstwhile (and perhaps soon to be again) prime minister Silvio Berlusconi?

Elsewhere:

1. Iron ore provider Cliffs Natural is down 11 percent pre-open on downgrade from Morgan Stanley; Credit Suisse lowers their price target. The problem? Iron ore prices are still weak, and supply is still high--and growing. And CLF is a high-cost provider.

Yet wait a minute: the stock is already down 40 percent in 2013, and they already cut their dividend. On that alone, Goldman upgraded the company this morning, though only to Neutral from Sell.

2. Is Cyprus really different? To some extent, yes. It's unlikely long lines will form in front of, say, Banco Santander.

In most of the rest of Europe,the big banks are funded by debt and equity,rather than through deposits. Most of the bigger banks of Europe have very high shareholder equity compared to deposits; the opposite was the case in Cyprus.

This makes it more likely that any bailouts would be largely funded by haircuts for equity and debt, rather than cuts in bank deposits(unsecured creditors).

—By CNBC's Bob Pisani