Crisis!

The FT's Lex provides a good summary of the questions that are being asked of European banks:

Investors are screening banks on three main criteria. Those failing even just one are seeing their share prices head south. First, does a bank have enough liquidity to stay solvent? That means looking at its funding mix, in particular its reliance on wholesale markets, and trying to work out whether mortal damage would be done to earnings if this source of capital dried up. This is where Bear tripped up, as did Northern Rock in the UK. It is also why Lehman Brothers and the Icelandic banks are under pressure.

But even banks that appear well capitalised are being marked down because of the third screen: asset quality. This fear of further writedowns is pervasive and poor disclosure has only added to the problem. Swiss bank UBS, despite a strong capital position and a raft of profitable businesses, is the highest profile victim of such distrust