The banking sector was once again in focus after rallying last week, with negative news weighing on the sector. Analysts said banks are facing a barrage of problems which has sparked a sell-off in the sector.
"There's ongoing pressure at net interest margin, that's the core of the banking industry. If that is not going away, they have to find other areas to earn money," Sonja Laud, investment director of the global multi-asset group at Baring Asset Management, told CNBC on Monday.
"You are taking away the natural growth environment and you still confront them with the burden of extra capital, regulatory change, NPLs (non-performing loans) in some cases."
On Monday, a number of banks closed in the red, with Banca Monte dei Paschi di Siena off 4.4 percent, while Banca Popolare di Milano closed lower too. Bernstein cut its price target for HSBC, which closed over 1.5 percent down. The sector, however, closed higher.