These Important Stocks Are Trading Like A Financial Crisis Has Begun

European bank stocks are crashing.

Deutsche Bank (DB), Germany’s largest bank, has plunged 36% this year. Its stock is at an all-time low.

Credit Suisse (CS), a major Swiss bank, has plummeted 40% this year to its lowest level since 1991.

As you can see in the chart below, the STOXX Europe 600 Banks Index, which tracks Europe’s biggest banks, is down 27% this year. It’s fallen six weeks in a row, its longest losing streak since the 2008 financial crisis.

These are huge drops in a short six-week period. It’s the kind of price action you’d expect to see during a major financial crisis.

The sell-off in Europe’s banks has dragged down other European stocks. The STOXX Europe 600 Index, which tracks 600 large European stocks, is down 15% this year to its lowest level since October 2013.

•European banks are struggling to make money…

Deutsche Bank lost €2.12 billion for the fourth quarter… after making a €437 million profit the year before. Credit Suisse lost €5.83 billion last quarter… after making a €691 million profit the year before. Profits at BNP Paribas (BNP.PA) (BNPQY), France’s largest bank, plunged 52% last quarter.

•Europe’s crazy monetary policies are starving banks of income…

Dispatch readers know the Federal Reserve has held interest rates at effectively zero since 2008. The European Central Bank (ECB), Europe’s version of the Fed, also cut rates after the global financial crisis. Unlike the Fed, the ECB didn’t stop at zero…

The ECB dropped its key rate to -0.1% in June 2014. It was the first major central bank to introduce negative interest rates. Today, its key rate is -0.3%.

•The ECB’s key rate of -0.3% sets the tone for all interest rates in Europe…

It forces banks to charge a rock-bottom interest rate on loans. This has eaten away at bank profits, as The Wall Street Journal reports: