Stock markets have gone into retreat globally over concerns for the health of US banks in the tougher economy.

Banking stocks had led Wall Street lower on Thursday afternoon after trouble at two Californian banks.

First, a major crypto-focused lender called SIlvergate abruptly announced it was closing down.

SVB Financial Group, parent of startup-lender Silicon Valley Bank, then revealed a share sale to shore up its balance sheet due to declining deposits from clients struggling for funding.

It noted a higher-than-expected “cash burn” and rising cost of capital.

SVB stock lost 70% of its market value while shares of big US banks were dragged down with it.

JPMorgan Chase, for example, ended the day more than 5% lower and banking stocks in Asia and Europe followed in Friday deals.

Credit Suisse stock hit al all-time low while Deutsche Bank fell 8%.

In London, HSBC and NatWest led the FTSE 100 down at the open – in a broad-based sell-off.

The UK listed banks all slid by around the 4-5% mark, taking the FTSE 100 index more than 150 points, or 2%, lower.

ING economist Rob Carnell said of the declines: “I think there’s speculation that there are wider problems within the US.banking system, or there’s that potential.”

Investors were fretting about the impact of rising interest rates, given signals from the chair of the US Federal Reserve during the week that it was far from ending its cycle of interest rate hikes to cool inflation.

While that would normally be supportive of banking stocks, they are holders of US treasuries and mortgage-backed securities which were bought at rock bottom prices and have now soared due to rising rates.

Market experts said the widespread sell-off of banking stocks followed SVB’s $2.25bn capital raise, which was in response to a $1.8bn loss on the sale of a portfolio marked at $21bn.

The portfolio included US treasuries and mortgage-backed securities.

Neil Wilson, chief market analyst at markets.com, said he did not see the reaction as a Lehman Brothers moment marking any kind of financial crisis.

“SVB does not represent the wider US banking sector, albeit the plummet in SVB stock clearly hit sentiment,” he noted.