The local market opened sharply lower and accelerated losses amid reports EU leaders failed to reach a deal on achieving fiscal union.
Among the major banks CBA tumbled 1.7%, while rival WBC declined 2.1%.
Last night both banks announced that they will be passing the on the full 25 bps rate cut to consumers.
The big miners were also hard hit on the back of weaker commodity prices; BHP lost 3.1%, and Rio Tinto shed 3.6%.
Extract Resources was one of the exceptions of the day, soaring 4.7% after news China Guangdon Nuclear Power Corp may offer $8.65 a share for the miner.
The ASX 200 slumped 78 points (-1.8%), settling at 4203.
Today’s fall coupled with previous losses dragged the market 2% lower on the week.