On Tuesday, after assurances from President Joe Biden and other policymakers failed to calm the markets and prompted a reevaluation of the outlook for interest rates, the fallout from the collapse of Silicon Valley Bank further battered international bank stocks.

Biden's attempts to assuage investors' concerns about a possible spread of the crisis to other lenders around the world came after emergency U.S. measures to support banks by providing them with access to additional funding failed to work.

On Tuesday, the price of banking stocks in Asia continued to fall. Japanese companies were particularly hard hit, and the wider market also fell as a result of concerns about systemic risk.

"Bank runs have started and  interbank markets have become stressed," said Damien Boey, chief equity strategist at Sydney-based investment bank Barrenjoey. "Liquidity measures undoubtedly should have stopped these dynamics, but Main Street has been watching news and lines, not financial plumbing,"

Investors who bet that the Federal Reserve wouldn't hike next week caused a frantic race to reprice interest rate expectations, which also sent shockwaves through the markets.

There is currently a 50% chance that there won't be a rate hike at that meeting, and rate reductions are anticipated for the second half of the year. With a 70% chance of 50 basis points, a 25 basis-point increase was fully priced in early last week.

According to analysts, the sector is still plagued by uncertainty as investors remain very concerned about the health of smaller international banks, the possibility of stricter regulation, and a preference to protect depositors over shareholders should other banks fail.

Major American banks suffered a loss in stock market value of roughly $90 billion on Monday, bringing their loss over the previous three trading sessions to almost $190 billion.

Local American banks took the biggest hit. Shares of First Republic Bank fell more than 60% after investors were left unconvinced by news of new financing, and rating agency Moody's considered downgrading the bank.

The Stoxx Europe Banking Index finished 5.7% lower. Commerzbank of Germany dropped 12.7%, and Credit Suisse dropped 9.6% to a record low.

In response to the biggest U.S. bank failure since the 2008 financial crisis, Biden said his administration's actions meant "Americans can have confidence that the banking system is safe." He also promised tougher regulation.

You'll have access to your deposits when you need them, he assured.

On Monday, SVB's clients received access to all of their deposits, and authorities established a new facility to allow banks to access emergency funds.

In a letter to customers, the bank's new CEO, Tim Mayopoulos, stated that it was open, conducting US business as usual, and anticipating the return of cross-border transactions in the next few days. The FDIC chose Mayopoulos, a former CEO of Fannie Mae, to lead SVB.

Regulators also acted quickly to shut down New York's Signature Bank, which had recently come under fire.

"A serious investigation needs to be carried out on why the regulators missed red flags." and what needs to be overhauled," declared Mark Sobel, a former senior Treasury official and the current U.S. chair of the think tank Official Monetary and Financial Institutions Forum.

The Globe and Mail reported on Monday that Canada's banking regulator had taken steps to start daily check-ins with banks so that it could keep track of their liquidity.

Indicators of credit risk in the banking systems of the United States and the eurozone increased slightly in the money markets, while the price of gold increased above the crucial $1,900 mark.

Japan's banking stocks were affected by this, falling 6.7% in early Asian trade to their lowest level since December.

According to Yunosuke Ikeda, chief equity strategist at Nomura Securities, the outlook for an eventual pivot in Japan away from ultra-low interest rates has been muted by the shift to much less aggressive Fed hike expectations.

"The pressure to unwind positions is extremely big here," said Ikeda. The prospect of higher interest rates had been "the reason investors have been really excited about Japanese bank stocks."

Global businesses with SVB accounts hurried to evaluate the effect on their finances. The crisis team of the central bank of Germany met to assess any consequences.

After lengthy negotiations over the weekend, HSBC announced it would pay £1 ($1.21) for the British division of SVB. On Tuesday, HSBC's Hong Kong-listed shares decreased by more than 6%.

Despite SVB UK's modest size, calls for government assistance for Britain's startup industry—and its particularly vulnerable biotech sector—were raised as a result of the company's abrupt demise.