Shockwaves from the collapse of Silicon Valley Bank (SIVB.O) pounded global bank stocks further on Tuesday as assurances from President Joe Biden and other policymakers did little to calm markets and prompted a rethink on the interest rate outlook.

Biden’s efforts to reassure markets and depositors came after emergency US measures to shore up banks by giving them access to additional funding failed to dispel investor worries about potential contagion to other lenders worldwide.

Banking stocks in Asia extended declines, with Japan’s banking subindex (.IBNKS.T) leading the fall, down 6.7% in early trade to its lowest since December.

“Bank runs have started (and) interbank markets have become stressed,” said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey. “Arguably, liquidity measures should have stopped these dynamics but Main Street has been watching news and queues – not financial plumbing.”

A furious race to reprice interest rate expectations also sent waves through markets as investors bet the Federal Reserve will be reluctant to hike next week.

Traders currently see a 50% chance of no rate hike at that meeting, with rate cuts priced in for the second half of the year. Early last week, a 25 basis-point hike was fully priced in, with a 70% chance seen of 50 basis points.

With investors fearing additional failures, major US banks lost around $90 billion in stock market value on Monday, bringing their loss over the past three trading sessions to nearly $190 billion.

Regional US banks were hit the hardest. Shares of First Republic Bank (FRC.N) tumbled more than 60% as news of fresh financing failed to reassure investors and rating’s agency Moody’s reviewed it for a downgrade.

Europe’s STOXX banking index (.SX7P) closed 5.7% lower. Germany’s Commerzbank (CBKG.DE) fell 12.7% and Credit Suisse (CSGN.S) slid 9.6% to a record low.

Biden said his administration’s actions meant “Americans can have confidence that the banking system is safe,” while also promising stiffer regulation after the biggest US bank failure since the 2008 financial crisis.

“Your deposits will be there when you need them,” he said.

Access to deposits

SVB’s customers will have access to all their deposits from Monday and regulators set up a new facility to give banks access to emergency funds. The Fed made it easier for banks to borrow from it in emergencies.

In a letter to clients, SVB’s new CEO Tim Mayopoulos said the bank was open and conducting business as usual within the United States and expected to resume cross-border transactions in the coming days.

“I recognize the past few days have been an extremely challenging time for our clients and our employees, and we are grateful for the support of the amazing community we serve,” said Mayopoulos, a former CEO of federal mortgage finance firm Fannie Mae who was appointed by the FDIC to run SVB.

US bank regulators sought to reassure nervous customers on Monday who lined up outside SVB’s Santa Clara, California, headquarters, offering coffee and donuts.

“Feel free to transact business as usual. We just ask for a little bit of time because of the volume,” FDIC employee Luis Mayorga told waiting customers.

Regulators also moved swiftly to close New York’s Signature Bank SBNY.O, which had come under pressure in recent days.

“A serious investigation needs to be undertaken on why the regulators missed red flags … and what needs to be overhauled,” said Mark Sobel, a former senior Treasury official and US chair of Official Monetary and Financial Institutions Forum, a think tank.

Fallout

In the money markets, indicators of credit risk in the US and euro zone banking systems edged up.

Emboldened by bets the Fed may have to slow its rate hikes, the price of gold, a popular safe-haven raced above the key $1,900 level.

Companies around the globe with SVB accounts rushed to assess the impact on their finances. In Germany, the central bank convened its crisis team to assess any fallout.

After marathon weekend talks, HSBC HSBA.L said it was buying the British arm of SVB for one pound ($1.21).

While SVB UK is small, its sudden demise prompted calls for government help for Britain’s startup industry, and its heavily exposed biotech sector in particular.

UK Prime Minister Rishi Sunak said there was no concern about systemic risk.

“Our banks are well capitalised, the liquidity is strong,” Sunak told ITV during a visit to the United States.

In China, where SVB was the main go-to foreign bank for the majority of start-ups, entrepreneurs and venture funds were also scrambling for alternative funding.