FXStreet - This week has been nightmarish for the European stock markets. All major European bourses yesterday ended lower, falling between 1.3 to 1.5 percent. Most sectors were in red by the end of the day. This fall has been been led by decline in share prices of energy companies mostly Oil major BP reported an annual loss of $6.5 billion in 2015 which is its worst in 20 years. Its revenue report caused its shares to drop around 9 per cent. Other energy sector leaders like ENI folowed suit. The share price fall seen in the energy sector was closely followed by the dismal performance of the banking sector where the big players saw huge fall in shares post the announcement of their revenue drop. Performance of a host of lenders in the Stoxx Europe 600 Index was at their worst, hitting the lowest level since 2012. A s European banks hit multiyear lows it is being feared that some of the biggest names could take the Lehman route. Former hedge fund manager and Goldman Sachs alumnus Raoul Pal told CNBC "So many of these [bank stocks] are falling so sharply. I think people haven't even caught up with what is going on, and that really concerns me,". He said he is terrified by the look of “long-term share charts of them”. He admitted not seeing a more dismal state of affair in a long time. He holds negative interest rate as the primary reason for the trouble in the banking sector. The ECB, as we are aware has cut rates deep into the negative territory, meaning it will charge banks more for parking cash with it. This is ECB’s way to prompt banks to lend out more. The lower rates encourage people to borrow extensively and then they find themselves in no position to pay back. This adds to the bad loans of the banks thereby negatively impacting their books. He also noted how banks are under tremendous pressure on account of weak global outlook as well as issues marring the performance of the sector. He has also warned that the crisis could quickly extend to the US banks. New Europe noted "Major European banks... are significantly exposed to China and if there is significant deleveraging the impact will no doubt be global." Investors have expressed concerns about the dropping profits of many of the big players in the sector.Italian lenders led the declining share price trend. Banco Popolare SC and Banca Popolare di Milano Scarl shares dropped more than 5.7 percent over the bad debt concerns. Banca Monte dei Paschi di Siena (BMPS) shares fell down 6.7 percent as stories on potential tie-ups continue to do the rounds. Reuters highlighted a report by Italian newspaper La Stampa, according to which BMPS could be sold off in pieces. Swiss bank UBS shares fell sharply. It dropped 7.6 percent, after its flagship wealth management business took a beating. Some European banks were however a little better off. Spain's BBVA said net profit jumped 36.4 percent in the fourth quarter from a year earlier to 940 million euros ($1 billion) led by fall in bad loans. Shares were however off more than 2 percent. Higher trading income caused Danske Bank’s fourth-quarter pretax profit to rise beating estimates. Danske Bank’s shares rose 3.9 percent. For more information, read our latest forex news.