The U.K.'s referendum decision to leave the European Union spawned uncertainty over Europe's growth outlook, financial regulation and legal frameworks. That sent banks' shares tumbling to multi-year lows, as investors rushed to safe havens.
U.S. banks weren't spared, especially those that benefitted from the EU's "passporting" regulations, which allowed them to run trading operations across the EU with a U.K. base.
Brexit uncertainty also highlighted the high levels of bad debt held by Italian banks. Nearly 17 percent of bank loans in Italy have gone bad. On a percentage basis, that's three times the level of bad bank loans in the U.S. at the height of the financial crisis.
German banks' shares were also taking a hit because of their high exposure to London. Among German banks, Deutsche Bank and Commerzbank had the largest business dealings in Britain.
As we enter the second-quarter earnings season, which banks look worst positioned?
