The signs are everywhere - if you choose to look - Europe's banking system is collapsing (no matter what Draghi has to offer). From record lows in Deutsche Bank and Credit Suisse to spiking default risk in Monte Paschi, the panic in Europe's funding markets (basis swaps collapsing) is palpable.

Tumbling to a fresh post-Brexit low, Europe's Stoxx 600 Bank Index is testing EU crisis lows...

With Credit Suisse smashing to record lows...

and Deustche Bank crashing towards the inevitable Lehman moment...

As it seems the most systemically dangerous bank in the world is liquidating aggressively (via Reuters)

Deutsche Bank is looking to sell at least $1 billion of shipping loans to lighten its exposure to the sector whose lenders face closer scrutiny from the European Central Bank, sources told Reuters. While the oil tanker trade has picked up, the container and dry bulk shipping industries are struggling with their worst downturn due to a glut of ships, a faltering global economy and weaker consumer demand. Banking and finance sources familiar with the matter said Germany's biggest lender was initially looking to offload at least $1 billion. "They are looking to lighten their portfolio and this includes toxic debt. It makes commercial sense to try and sell off some of their book," one finance source said. "They are not looking to exit shipping." Deutsche Bank, which has around $5 billion to $6 billion worth of total exposure to the shipping sector, declined to comment.

Senior and Sub CDS are widening dramatically today with Italy's short-sale ban on Monte Paschi shares sparking a 10% bounce in the stock but CDS are unchanged implying a 66% chance of default.

Notably BMPS shares are leaking back lower after the opening ramp (desk chatterof takeover rumors have been dismissed) and the rest of the Italian banking sector is catching its cold (as we warned it would when Consob instigated the short-sale ban)

Which helps explain the crisis in Europe's funding markets as USD demand smashes higher (-9bps to -49bps in EUR-USD basis swaps)...

With counterparty risk concerns growing in Sterling banks...

Charts: Bloomberg