Shocks to the European banking sector can have unexpected origins. Banco Espírito Santo (BES) had seemed a relatively unremarkable mid-sized bank with total assets of about €90bn. But in early July, concern over the health of the Portuguese lender triggered a sudden sell-off across European stock markets, sparking fears that peripheral Europe’s banking crisis was about to re-erupt.
Angela Merkel, the German chancellor, was moved to comment that the market turmoil caused by a single Portuguese bank shows how quickly uncertainty can return and how fragile the eurozone remains.
