U.S. Banks: Euro Smackdown Losers

Shares of major U.S. banks pulled back on Wednesday, after Fitch Ratings said in a report that the group could be "could be greatly affected" if contagion continues to spread beyond the stressed European markets" of Greece, Ireland, Italy, Portugal, and Spain.

Morgan Stanley (MS) was the sector loser, with shares dropping 8% to close at $14.66. Fitch said that Morgan Stanley's net exposure to stressed European markets was a relatively low 7.4% of tier 1 capital as of Sept. 30, which was relatively low when compared to exposure of 14.2% of Tier 1 capital for Citigroup (C), 12.6% for JPMorgan Chase (JPM), and 11.0% for Bank of America (BAC).Morgan Stanley's shares were further pressured by a Securities and Exchange Commission announcement of charges against Morgan Stanley Investment Management, alleging that MSIM had violated "securities laws in a fee arrangement that repeatedly charged a fund and its investors for advisory services they weren't actually receiving from a third party."The third party was the Malaysia Fund, and MSIM agreed to settle the charges for $3.3 million, "without admitting or denying the SEC's findings." The SEC said its investigation was "continuing." U.S. stocks sold-off late in the session, following the Fitch report, with the Dow Jones Industrial Average off by 190 points to close at 11,905.97. The KBW Bank Index (I:BKX) declined 2% to close at 38.01, with 38.73, with 19 of the 24 index components showing gains.Large U.S. banks seeing shares drop 4% included Bank of America, closing at $5.90; Bank of New York Mellon (BK), at $19.64; Citigroup, at $26.86; Capital One Financial (COF), at $42.07; JPMorgan Chase, at $31.47; and Goldman Sachs (GS), which closed at $95.60.Capital One on Tuesday reported a third-straight increase in credit card delinquencies in October, with 3.45% of managed card receivables past due 30 or more days. RELATED STORIES: U.S. Banks Threatened by Euro Contagion: Fitch >Bank Credit Cards Weaken: Analysts >153 Banks On the Brink, and Counting >Banks Face New Multibillion-Dollar Mortgage Slam: Analyst >5 Banks Analysts Understand Least >5 Most Heavily-Shorted U.S. Bank Stocks >Regulator Sees 'Pandemic of Ponzimonium' >18 Banks Slashing Jobs >Citigroup May Cut 3,000 Jobs >-- To contact the writer, click here: Philip van Doorn.To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn. >To order reprints of this article, click here: Reprints