Here's what the plummet in European bank stocks mean for U.S. markets

Joining us right now in the Squawk Newsline to try to understand what's happening here, Peter Bookvar, investment to chief investment officer, I should say, a briefly financial group, also a CNBC contributor. Make some sense of this for us, Peter. What do you think is really happening with the banks in Europe, because that seems to be the problem at least of this morning at the moment? Peter Bookvar, CNBC's CEO, The Times Damage by the SBB news. It's just, well, shoot first and then figure out things later. I don't think that many of these large European banks have a deposit fleeing risk, but I think what this is telling us is there's the potential for just a large credit extension contraction that banks are going to embark on, focus more on firming up balance sheets, and rather than focus on lending. And also you have years of low interest rates where a lot of these banks loaded up on duration and in Europe, up until recently, with yields below zero. So there's a lot of toxic stuff in terms of mark to market, not in terms of where they'll end up ensuring and getting principal back.

But that's what this is. It's a balance sheet rethink that the markets have. And also you have to wonder with a lot of these banks if they're going to have to start going out and raising equity, well, that's going to dilute shareholders. So I want to make an important point that I'm less concerned about another SDP bank run, but I think investors, at least equity holders, need to be worried about what the loan story is looking like and what potential dilution lies ahead. Right. The mark to market issue, Peter, I mean, we've seen that play out also in the Japanese banks over the past couple of sessions or so. So I'm just trying to figure out in terms of the European banks, is this the concern that there's an SVB like sort of blow up hidden in their books? And or what does this have to do with the credit suise situation in particular, where not only did it delay its annual report, but now it's saying that that it may not be reliable and that the current financial statements are fair, but they can't vouch for them paraphrasing.

Yeah. I mean, it seems like the credit suise situation has been ongoing for the last couple of years. Sure. And it's not just coming out of nowhere. And one has to believe that at the end of the day, how can the Swiss government not backstop credit suise in some way? That doesn't mean the equity is going to be worth anything, but at least the functioning of the bank and the depositors will be protected just as we saw here with a few banks. I think broadly speaking, I think the European governments, it push comes to shove, will do the same in terms of the depositors. And that's why I don't think that that is the risk going forward.

I think this is going to be more of a bound sheet fix, a workaround with all these sovereign bonds. I mean, that's the iron of this whole thing. It's owning sovereign bonds that you will get your principal back that has caused this sort of havoc in a lot of the bank equities.

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