Why have the prices of bank shares fallen so sharply? A part of the answer is that stock markets have declined. Banks, however, remain the weak link in the chain, fragile themselves and able to generate fragility around them.

Between January 4 and February 15 2016, the Standard & Poor 500 index fell 7.5 per cent while the index of bank stocks fell 16.1 per cent. Over the same period, the FTSE Eurofirst 300 fell 9.5 per cent, while the index of bank stocks fell 19.5 per cent.

The decline of European stocks was a little bigger than that of US ones but the underperformance of the European banking sector was similar. Relative to the overall US market, the index of shares in US banks fell 9.1 per cent, while that of European banks fell 11 per cent relative to European markets — and so only a bit more. (See charts.)