In the US, Citigroup was again one of the day's biggest victims with its shares briefly falling below the low they had reached in November before the government stepped in with a $300bn bail-out. They later pared some of the losses and by early afternoon in New York were trading at $3.10, down more than 11 per cent from Friday's close.
Banking shares also slid in the UK, where the government's decision to pump billions of dollars into Royal Bank of Scotland, which earlier this week reported the biggest loss in UK corporate history, reawakened talk that the US government might come to Citi's rescue for the third time in three months.
State Street, one of the world's largest custodian banks, saw its shares nearly halve after news of a plunge in its fourth-quarter profits and higher-than-expected unrealised losses on investments.