Capital Is Tight &Nbsp; European Banking Stocks Collectively "Fall".

As Europe's debt crisis has dragged on, European banks are under increasing pressure.

On Thursday, the market is rumoured that the US regulators are investigating the financial position of big European banks in the US subsidiary, attracting European banking stocks.

To a large extent, the stock market crash in Europe and the United States began on Thursday.

On the same day, European bank shares hit their biggest one-day drop in more than two years.

Bloomberg Europe's banking and financial services 500 index closed down 6.7%, the biggest decline since March 2009.

Bank shares once again plunged into a group, which is closely related to a report in the Wall Street journal.

Reported that the New York Federal Reserve is stepping up monitoring of the branches of large European banks in the United States, for fear that the European debt crisis will spread to the US banking system.

The Fed asked the European banking industry to provide more information to see if it has funds to meet its daily operations in the United States, the report said.

Under certain circumstances, the authorities have even put pressure on the banks to restructure their business structure in the US.

The report quoted European banking executives involved in the talks as saying that Fed officials are "very concerned" about the financing difficulties facing European banks in the United States.

On the 19 day, the Wall Street journal also quoted people familiar with the matter as saying that the New York Fed has recently asked these agencies to submit more information, indicating whether they have reliable channels to obtain funds to meet their daily operational needs.

In fact, the potential risks faced by European banks because of the debt crisis are not the first to emerge.

As the debt crisis has not been alleviated, news of tight banking funding in Europe has been coming.

Banks in France and other countries plunged for a long time.

Official emergency rumor

In response to panic in the market, the US banking sector made a clarification at the first time.

In response to the Wall Street journal's report, Dudley, President of the New York fed, said that the Fed has been monitoring the banking situation and has been "completely alike" with banks in the US and Europe.

Dudley made the above remarks in a public speech on the 18 day.

In response to questions from the outside world, Dudley said, "this is a standard operation procedure and is routine.

We do not pay much attention to foreign banks, and treat foreign banks and American banks equally.

According to a European bank, the crisis has led to tight supervision over the operation of European banks in the US, but this is the usual reaction of local regulators.

The US watchdog fears that banks are overly dependent on short-term financing and fears that once the crisis worsens, funds may quickly flow back from overseas branches to their parent companies, the United States will spread to the United States, the source said.

Nevertheless, the tight banking funding in Europe seems to be an indisputable fact.

With the continuous fermentation of the European debt crisis, a large number of us money market funds have begun to withdraw from the European market. This has always been an important financing channel for European banks. Banks often obtain short-term dollar financing through the trillions of dollars in money market funds.

At the same time, the continuing tension in the situation has also led to caution in the inter bank lending and lending in the euro area itself.

In the past month or so, the cost of US dollar financing by euro zone banks has increased two times.

Data from Bloomberg show that the premium paid by European banks to the US dollar has reached its highest level since December 2008.

"Lehman moment" repeats itself?

Some market participants believe that the current tight financial situation in European Banking reminds us of the situation when Lehman went bankrupt.

Nuti Vega, managing director of the foreign exchange research department at Nomura, said that in the past four weeks, the US dollar holdings of foreign banks in the US dropped by about 38% to $550 billion.

He believes that although there may not be a shortage of short-term foreign and domestic banks, the trend of the US dollar will indeed be scarce in the next two to four weeks.

Many signs are pointing to the "shortage of money" in European banking.

Data released by the Federal Reserve last week showed that the US branches of foreign banks first borrowed dollars from overseas institutions for the first time in 10 years.

It is also reported that a euro zone bank borrowed $500 million from the European Central Bank on Wednesday, which is much higher than the level of bank financing in the open market. This is the first time European banks have used central bank credit since February 23rd.

The short-term financing market also highlights the increasing pressure of financing from the European banking sector.

The London Interbank Offered Rate (LIBOR) has risen to a four month high in three months. Analysts believe that this indicates that more banks will have to start raising money from the money market at higher cost because they can hardly get short-term funds from their peers.

However, officials are not convinced of the current banking situation.

Stark, member of the European Central Bank, said in an interview 19 days ago that the interbank lending market is completely different from the situation when Lehman Brothers went bankrupt.