Big Banks haven’t been the place to be as an investor, particularly since the start of the year. Indeed, the banking sector has been among the worst hit by the market sell-off since the turn of the year with the FTSE 350 Banks Index off by over 18% since the start of trading on 4 January up to 8 February, according to data from Stockopedia.

A quick glance at the chart shows in detail the extent of the sell-off in Barclays (LSE: BARC), Standard Chartered (LSE: STAN) and HSBC (LSE: HSBA), all of which sagged with the FTSE 100 when the increased volatility hit markets across the world in August. It’s clear, however, that the sell-off has intensified since the turn of the year.

A wall of worry

Among the many moving parts behind the scenes, investors seem to be more concerned about global growth fears, ahead of the upcoming reporting season that kicks-off later this month.

The fear seems to be spreading far and wide with Chancellor George Osborne delaying the planned sale of shares in Lloyds to the public, pledging to only sell when the turbulent markets have calmed down. The government had intended to sell around £2bn worth of Lloyds shares this spring, as part of the plan to offload its remaining stake in the bank.

That concern seems to have intensified on Monday with a further sell-off of between 4% and 6% as investors sought out other stocks, such as those with exposure to the perceived safe haven of gold. Indeed, Randgold Resources closed up by 13% as investors closed their positions in the more economically sensitive FTSE 100 stocks.

A canary in the coal mine?

I’ve posed this theory before, but for those who aren’t aware of the saying, the term “canary in the coal mine” dates back to the times when miners would take canaries with them down the pit. If the gas levels started to become unsafe, the canary would die, thus giving a warning sign to the miners that there was gas in the area in which they were working.

In a similar vein, it appears to me that investors are currently reacting in a similar way by selling-off the banks, not to mention other financial stocks. They’re worried about their exposure to the global economy and perhaps more importantly the levels of debt, or quality of debt.

As we saw in the last market meltdown, the banks came unstuck in a big way owing to the fact that nobody, not even the banks, knew enough about the quality of debt on their books. While I’m not in possession of a crystal ball, I don’t think they would make the same mistake this time round, though one should never say never!

Rich pickings to be had?

Taken as a basket, these shares currently trade on a forecast PE of around eight times earnings and yield nearly 6%.

I think the market is currently throwing the baby out with the bathwater as it worries about global growth and in my view, the banks are becoming more interesting – despite the concerns.

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Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.