Western banks like to present any business they have in emerging markets as an elixir that can revive their growth prospects when their domestic business is maturing. But investors now fear that this exposure has turned poisonous.

Throughout the past decade, a host of European financial institutions planted flags in central and eastern Europe (CEE), the former Soviet Union, Africa and the Middle East, often by acquiring local banks at stratospheric valuations. The hope was that this might rub off positively on the value of their own stock, given the premium ratings traditionally afforded to emerging markets banks such as Standard Chartered, the UK lender with operations spanning much of Asia.