Banks in the euro zone periphery are showing the strains of the Cypriot crisis, with Italian and Spanish giants like UniCredit, Intesa Sanpaolo and Santander feeling the stress of contagion, says Markit's Gavin Nolan.

SHOWS: LONDON, ENGLAND, UK (MARCH 19, 2013) (REUTERS - ACCESS ALL)

1. MARKIT DIRECTOR OF CREDIT RESEARCH, GAVIN NOLAN, SAYING:

'We're seeing it more in the banks really. We're seeing more stress in the banks. What once the Cyprus bailout its affected creditors, people are asking, are senior bank bondholders next? So banks should be showing the burden more than the actual sovereign itself.
(QUESTION: And what banks in particular are we talking about here?)
We're talking the big Italian and Spanish banks, the likes of UniCredit, Intesa Sanpaolo, Santander, they're seeing quite a lot stress at the moment. But again, it's nothing too dramatic compared to what we're seeing in the past.
(QUESTION: But a bank like Santander, I mean it's a global bank, it's a huge - it's got operations in South America which are relatively secure - even Santander's coming under pressure?)
Yeah, it's coming under some pressure. It's just this fear of contagion. Like you say, I think it's a fairly solid bank, with multinational presence but it's the fear of contagion, it could affect Spain and Italy.
(QUESTION: And is this - I mean we're talking Italy and Spain here, maybe perhaps the most vulnerable Eurozone countries and banking systems, but are we seeing it played out across Western Europe in the senior bond space?)
To an extent, we're seeing the Markit iTraxx Senior Financial Index, which is the benchmark for senior debt in Europe, that's why now at 11 basis points, in the past few days about 155 basis points. Which is a significant move and we're seen banks underperform the broader corporate sector quite markedly. But again, it's not the panic that we've seen at the past. And with the ECB still standing there at the ready, we're not seeing the panic conditions we've seen last year.
(QUESTION: What about volumes? Are we seeing - have we seen a dramatic increase in the number of quotes posted by CDS traders?)
In banks, you've seen probably a slightly above average levels in our quote system this week. Again, nothing too dramatic. In sovereigns itself, we are actually seeing a slightly lower amount. I think that reflects some of the uncertainty. And also, we've got the Index --, this is the main CDS indices tomorrow and that can affect liquidity is well.'