Banks across Europe have endured a choppy year, to say the least, and some experts say the effect on U.S. stocks is forthcoming.
Deutsche Bank hit an all-time low on Wednesday. Major Italian bank Banca Monte dei Paschi di Siena received a poor rating in a stress test earlier this week. And UniCredit, Italy's largest bank, saw its shares fall after results were relatively weak.
"It really is a disaster with these banks. I'll give you a good example: The IMF called Deutsche Bank the most dangerous bank in the world," Eddy Elfenbein, editor of the blog Crossing Wall Street, said Wednesday on CNBC's "Trading Nation." He added that turmoil across European banks "very well may" send shockwaves to international markets.
Elfenbein was referring to a report published by the International Monetary Fund in June noting that the key German bank, among the globally systemically important banks, "appears to be the most important net contributor to systemic risks, followed by HSBC and Credit Suisse."
"Right now it's going for about a quarter of its book value; it's just a mess we see out there, these European banks. They have bad loans, bad assets, and they're not nearly capitalized like they ought to be," said Elfenbein.
He said the contributors to challenges faced by many European banks include troubling stress tests, which measure the resilience of banks in the case of hypothetical financial crises, risks associated with contagion, and, of course, Britain's decision to leave the European Union, which sent the pound plummeting to 30-year lows.