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RELATED: SANTANDER SECURITY ALERT ON CASH POINTS France last month declared a state of economic crisis adding to worries about the stability of the eurozone. Regulations now require banks in Europe to hold more cash as a buffer against market shocks, but Mr Pal said balance sheets haven't been cleaned up and warned negative interest rates are hitting the firms hard.

Deutsche Bank, Credit Suisse, Santander, Barclays and RBS are among the stocks that are falling sharply sending shockwaves through the financial world, according to former hedge fund manager and ex Goldman Sachs employee Raoul Pal. At the height of the financial disaster in 2008, the Government was forced to step in and rescue Lloyds Banks and RBS from liquidation, while the European Central Bank gave huge bailouts to Spain, Greece, Portugal and Italy. Last month, the head of the European Central Bank Mario Draghi raised expectations that it could undergo yet more Quantitative Easing in March - in effect printing billions of pounds worth of money - in the face of ongoing economic fears.

The pundit's comments come as a number of bank shares plunged to their lowest levels for years.



The Chancellor George Osborne has even been forced to push back Lloyds Bank's retail share sale after stock value plunged too far.



Mr Ral told CNBC news: "I look at the big long-term share charts of them, and I think this looks very terrifying indeed. I have not seen anything like this for a long time.



"Negative rates are something the banks can banks cannot deal with and that's being priced into share prices quickly."



Fears over low oil prices and China's slowing economy, tumbling stock values at the start of the year were largely driven by investors selling off oil and mining companies.



But now panic has spread into other sectors.



And Mr Pal said banking issues could be an even bigger worry than China's growth slowdown and cheap oil.

Express.co.uk has contacted the five banks for comment.

Credit Suisse, RBS and Deutsche Bank have declined to comment.