Shares in the US have followed the pattern in Asia and Europe
Markets in Europe and Asia had also seen falls in reaction to Charles Prince's exit, the second departure of a leading banking boss within days.
At close the Dow Jones had fallen by 0.38% to 13,543, the Nasdaq by 0.54% to 2,795.18, and the S&P; by 0.5% to 1,502.
Stock markets in London, Paris and Frankfurt all declined on Monday.
Credit squeeze
The FTSE 100 benchmark index closed down 1.06% at 6,461.4 at the end of the trading session in London, with Barclays, Northern Rock and Alliance & Leicester among the financial stocks seeing the largest falls.
In Frankfurt, the Dax index ended 0.53% lower at 7,807.55, while in Paris the benchmark Cac index slipped 0.63% to 5,684.62.
The risk in the market is credit risk
Jim Awad, WP Stewart Asset Management
By the close of trade in Asia the Hang Seng index was down 5% at 28,942.3 in Hong Kong, while in Japan the Nikkei had fallen 1.5% to 16,268.9.
Worries over banks' exposure to US sub-prime related debts has been causing market instability for several months.
Shares in Citigroup fell 4.85% to $35.90 in New York trade on Monday.
Meanwhile Lehman Brothers slipped 2.63%, Goldman Sachs fell 4.88% and Merrill Lynch fell 2.44%.
Hong Kong shares were also battered by further delays to a scheme which will allow Chinese investors to access the city's market.
'More to come'
"The risk in the market is credit risk," said Jim Awad, chairman of WP Stewart Asset Management in New York.
"You're getting plenty of indications that there are more write-downs to come. The fear is that if you get the credit market seizing up again, that could affect the economy going forward."
It is feared that the current credit squeeze - triggered by banks' unwillingness to lend while they assess the size of potential sub-prime mortgage related losses - will hit growth in the global economy.
Citigroup disclosed that its losses stemming from bad sub-prime related investments could amount to between $8bn and $11bn (£3.8bn and £5.2bn).
Mr Prince's departure followed the departure of Merrill Lynch boss Stan O'Neal last week after the firm suffered its first quarterly loss in five years.
Traders digesting the scale of the crisis in the US banking sector are worried about the exposure of European banks to worthless sub-prime related assets.
Los índices estadounidenses cayeron luego de que se perdiera la esperanza en el sector bancario tras la renuncia del presidente ejecutivo de Citigroup y de que el grupo anunciara pérdida millonarias por préstamos, impulsando preocupaciones por la salud del sistema financiero americano.

Los mercados registraron pérdidas tras la renuncia de Charles Prince, la segunda renuncia de un importante presidente de banco en pocos días. El Dow Jones cayó en 0,37% a 13544,54 puntos, el Nasdaq tocó 2793,56 tras pérdidas de un 0,60%, y el S&P 500 cayó en un 0.12% hasta los 1507,91.

Prince renunció como presidente de Citigroup, que anunció podría cancelar pérdidas por créditos subprime. Las bolsas de Frankfurt, Paris y Londres también registraron pérdidas.

La tabla a la derecha muestra los principales índices; todos ellos registraron pérdidas.

La exposición de algunos bancos a deudas por sub-prime ha causado la inestabilidad de los mercados durante meses; por su parte, las acciones de Citigroup cayeron en un 5%. Con esta situación, Citygroup ha declarado que sus pérdidas se podrían estimar entre 8 y 11 mil millones.

La renuncia de Prince ocurre poco después de la del presidente de Merrill Lynch, Stan O'Neal, luego de que la compañía sufriera pérdidas exorbitantes.

Además, el dólar batió una baja de una semana de 114,03 con el yen mientras que el dólar se planteaba en $1,4465 con el euro. Además, el oro rompió un récord de 28 años al llegar a $811, mientras que el petróleo – que había pasado los 96$ la semana pasada – bajaba en 0,7% a $95,22 por barril.