Australia's Commonwealth Bank, South Korea's Shinhan Financial Group and Citigroup all declined.
Japanese banks however edged up, with Shinsei Bank extending gains a day after a group of investors led by U.S. buyout firm J.C. Flowers & Co bid about $1.8 billion for up to 32.6 percent of the lender.
The Nikkei 225 Average ended at a 16-month closing low, as the stronger yen and a weaker outlook for the U.S. economy depressed exporters such as Honda Motor.
South Korea's KOSPI posted its weakest close in almost three months as banking stocks slid on caution about fourth-quarter earnings and as LG Electronics wiped out early gains amid a cloudy export outlook.
Australian shares fell 0.6 percent to their lowest close in nearly nine weeks as growing credit concerns saw the major banks such as National Australia Bank come under renewed selling pressure. But BHP Billiton led other commodity firms higher, after oil prices jumped to a new record and gold prices also gained, helping to cushion the broader market's fall.
Singapore's Straits Times Index closed 2.7 percent lower. Shares of SembCorp Marine, ended 5.7 percent in the red after the world's second-largest offshore oil-rig maker appeared to be heading for a legal row with France's biggest listed bank BNP Paribas.
Hong Kong stocks closed 4.2 percent down as investors grew cautious after the U.S. Federal
Reserve trimmed its growth forecasts for 2008, prompting them to bail out across the board. Low trading volumes before a long weekend holiday in the U.S. also cemented the view that liquidity was ebbing. Investors believed China was unlikely to launch in the near-term a program first announced in August that would allow mainlanders to invest directly in Hong Kong stocks.
China's Shanghai Composite Index also finished lower by 1.5 percent in light turnover, hit by weakness in Hong Kong while financial shares were sluggish.