European banking stocks are taking “suffer a blow” once again. On Tuesday 26 July as Friday's stress tests continue to weigh heavily on the minds of investors in Europe's financial sector.Banking stocks plummeted on Monday as investors got their first chance to digest the results of the European Banking Association stress tests released after markets closed on Friday night, and on Tuesday that plunge has continued, with virtually every lender on the continent in negative territory, and the STOXX Banking Index substantially in the red.

On a bank-by-bank basis, Italian lender Monte dei Paschi di Siena, which sits at the very heart of the country's banking crisis, is lower by more than 7% on the day, having seen its stock price jump on Monday. Monte dei Paschi managed to agree a last minute rescue deal with a consortium of banks on Friday evening to try and address its non-performing loan problems. However, the world's oldest bank also came dead last in the EBA's stress test.
Despite assurances from Italian prime minister Matteo Renzi that Monte dei Paschi's NPL problem is now over, investors are starting to doubt just how viable the rescue plan, which will give a €5 billion capital injection to the bank and shift its entire portfolio of NPLs (worth roughly €28 billion) into a securitization vehicle that actually is. That has sent shares crashing once more, and erased all of yesterday's gains.
The Europe 50 index is designed the track Europe's 50 biggest companies. The dumping of the two banks follows a more than 45% slump in shares of both Credit Suisse and Deutsche Bank so far this year.
British banking stocks have already taken a pounding in the aftermath of the UK's vote to leave the European Union, with shares in the country's biggest lenders falling as much as 30% on the day after the referendum as fears about the state of the economy hit home.

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