French President Macron invoked a controversial constitutional power to impose the pension overhaul by decree despite two months of coordinated nationwide strikes and some of the biggest protests in decades.
Shares of First Republic Bank and Credit Suisse dive back deep in the red and stock prices of other major banks also fall, with JP Morgan, Citigroup and Bank of America down at least three percent.
Switzerland's largest bank, UBS, is reported to be negotiating to buy all or part of Credit Suisse, with the blessing of the Swiss regulatory authorities, according to news reports.
Under the terms of the all-share deal, Credit Suisse shareholders will receive 1 UBS share for every 22.48 Credit Suisse shares held for a total consideration of 3 billion francs.
Rate hike comes as Federal Reserve Chair Jerome Powell says recent collapse of the Silicon Valley Bank is not indicative of wider weaknesses in the banking system.
