American shares of European banks fell Thursday as credit market concerns pressured financial stocks on both sides of the Atlantic.
Financial stocks sagged after Thornburg Mortgage Inc. and a Carlyle Group fund both received margin calls, or demands from lenders that the institutions pay back loans. Both Thornburg and Carlyle said the margin calls were related to mortgage-backed investments.
Lenders make margin calls if the value of collateral securing a loan decreases. Thornburg and Carlyle said their margin calls were made because of the rapidly falling value of mortgage debt.
The Dow Jones industrial average fell 186 points in afternoon trading, and the Bank of New York Europe ADR Index, which tracks more than 100 Europe-based stocks that trade on U.S. exchanges, fell 2.65 points to 166.94.
ADRs, or American Depositary Receipts, are securities that allow U.S. investors to trade shares of companies based overseas.
Shares of UBS AG took the largest fall, as JPMorgan analyst Kian Abouhossein said he believes the Swiss bank sold its portfolio of Alt-A mortgage-backed investments in a "fire sale."
He estimated that the portfolio was worth 25 billion Swiss francs ($24.38 billion), and said he thinks UBS sold it at the "fire sale" price of 70 cents on the dollar, or about $17.07 billion.
Home owners with Alt-A mortgages have better quality credit than those with subprime mortgages, but their credit is not "prime" quality.
As a result of the sale, Abouhossein predicted the Swiss bank will have to take a larger write-down of 18.5 billion Swiss francs ($18.04 billion) in the first quarter. He previously expected a write-down of $14.63 billion.
UBS ADRs sank $1.43, or 4.6 percent, to $29.40. Earlier, the stock fell to $29.23.
Elsewhere in the sector, shares of Barclays Group PLC of Britain fell $1.21, or 3.4 percent, to $34.28.
Banco Santander SA of Spain slipped 28 cents to $17.55.
Deutsche Bank AG stock declined $1.29 to $109.35.
ADRs of Credit Suisse AG slid 58 cents to $48.10.
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