European stock markets opened lower on Monday, with Credit Suisse shares plunging more than 60% after UBS agreed to buy the troubled bank in a $3 billion deal, valuing the Swiss lender at just a fraction of its market value and fueling fears of expansion banking activity. crisis, reports Reuters.

The pan-European STOXX 600 index was down 1.46 percent at 10:30 a.m. after closing Friday with its biggest weekly drop in a year.

Meanwhile, Credit Suisse shares fell 63.15% after rival UBS Group said it would pay 3 billion Swiss francs ($3.23 billion) for the 167-year-old bank and take losses of up to 5, $4 billion in a package softened on Sunday. Swiss regulators.

UBS shares were down more than 13 percent as of 10:30 a.m.

Analyst: “The problem is not solved. On the contrary, it has become global”

These sharp corrections followed a session of massive selling in Asian financial markets, as initial investor optimism about official efforts to stem the banking crisis quickly evaporated.

“It should be clear that after more than a week of banking panics and two government interventions, this problem has not been solved. On the contrary, it has gone global,” said Mike O’Rourke, chief market strategist at Jones Trading. “The news that UBS is buying Credit Suisse is likely to exacerbate Credit Suisse’s problems by moving them to UBS.”

Investors were also spooked by news that Credit Suisse’s additional $17 billion in bonds would be zeroed, angering some debt holders who believed they would be better protected than shareholders.

The European banking index was down 5.3% at 10:30 a.m., hitting its lowest level in three months.