Stocks of Italian banks are in leaders of European equities slump due to rising threat that new elections will strengthen populists parties’ positions, and they will challenge European economic traditions, Bloomberg reports.

Shares of Banca Monte dei Paschi di Siena SpA, bank rescued by the government, dropped the most. Its stocks lost 7,8%. Seven out of eight banks showing the worst results in Bloomberg European Banks Index were Italian lenders. UniCredit SpA and Intesa Sanpaolo SpA lost almost 5%.

New political elections among stronger agreement between populists parties are scaring investors as such coalition can take steps against European rules and euro. It will negatively affect Italian banks.

At least half of pressure on country’s stocks comes from bonds market. Ten year bonds yield grew up again on Monday to higher than 2,60%. It is the highest level in almost four years.

The situation got worse when one of parties’ leaders said that there is no sense for Italy to stay in European Union, unless it rewrites its rules.

As a result, such political situation is very unfavorable for Italian banks and other banks exposed to them, including France’s BNP Paribas SA and Credit Agricole.

European financial index dropped by 1,3%. Total decline in 2018 is 8% now.