Risk Unresolved: UBS's Acquisition of CS Leads to Continued Plunge in Banking Stocks.

　　Shares in European banks extended their decline, showing that market sentiment remains fragile even after UBS Group's acquisition of Credit Suisse. Importantly, the acquisition package included an outright write-off of CS's $17 billion AT-1 debt, a move that shocked the bond market, which is worth $275 billion.

　　Euro Stoxx Bank Index futures were down 3.8 percent at press time in light trade. Last week, the index fell 12 percent, wiping out about 111 billion euros in market value and nearly all of its year-to-date gains. Meanwhile, shares in HSBC Holdings plunged 6 per cent in Hong Kong after the Bank took over the UK assets of Silicon Valley Bank.

　　Flora Bokahut, an analyst at Jefferies Financial Group, said: "We believe UBS's acquisition of CS removes immediate industry tail risk, but it also raises questions. CS's AT-1 write-off to zero could spook holders of such securities in other banks."

　　Altaf Kassam, head of EMEA investment strategy and research at State Street Global Advisors, said: "While it may make sense to sell European bank stocks until the turmoil is over, we have seen before that when things reverse, the rally can be very steep." Staying out of the market can be costly."