European stocks are trading sharply lower on Monday, with banks across the region the biggest fallers on fears that the euro zone debt crisis has taken a turn for the worse over the weekend.
France is the biggest loser, with its CAC index off just over 4 percent and its major banks trading around 9 percent lower.
Fears over a downgrade of the French banks are rife as investors await a review by Moody’s due later this week.
Societe Generale on Monday unveiled plans to accelerate disposals and cut costs to free up 4 billion euros in capital.The French bank is now valued at just 12 billion euros after heavy selling over the last 6-8 weeks.
Details of an internal Societe Generale memo released by Reuters showed how seriously the bank's management is taking the current crisis.
"A takeover, today, is neither a solution nor [at] risk [of occurring]: all banks have seen their share prices drop," the memo obtained by Reuters said.
"The level of instability in the environment and the banking system means that all banks are faced with the same problem. It is not a solution to the current problem, regardless of the players."
On Friday, the U.S. market sold off on news that the European Central Bank's chief economist Juergen Stark resigned following a disagreement over the European Central Bank’s buying of Italian and Spanish bonds.
Germany has put forward deputy finance minister Joerg Asmussen to replace Stark, a decision that was welcomed by the chair of the euro group, Jean-Claude Juncker.
On Sunday, German magazine Der Spiegel reported that Germany's finance ministry is studying the potential impact of a Greek default and looking at scenarios which include Greece leaving the euro and defaulting in a disorderly way.
On Saturday one of German Chancellor Angela Merkel's coalition partners, and economy minister, said an orderly bankruptcy by Greece is no longer a taboo.
Greece will announce a new tax on real estate to make up for fiscal slippage and meet this year's deficit target, a government official told Reuters on Sunday.
Angela Merkel will meet with European Commission president Jose-Manuel Barroso in Berlin on Monday to discuss the Greek situation.
On Sunday the boss of the OECD defended the euro in an interview with CNBC. As speculation that heavily-indebted Greece may abandon the euro continued, Angel Gurria, the secretary-general of the OECD and a former finance minister in his native Mexico, told CNBC: "Nobody's going to be leaving the euro. More countries are going to be joining the euro."