Oil shares also plummeted as the OMXS index shed two percent of its value.
AIG, the world’s largest insurance company, went into freefall in early trading before leveling out on rumours of US government intervention.
The bad news from across the Atlantic was matched by a miserable day in all sectors on the Stockholm bourse.
By close of trading the OMS index had dropped two percent to 257.5 points.
Swedbank, with ties to the bankrupt Lehman Brothers investment bank, lost 7.9 percent of its value, dropping to 99 kronor.
Nordea (-2.8 percent), SEB bank (3.6 percent) and Handselsbanken (-2 percent) also saw their shares tumble, though not to the same extent.
Tanganyika Oils took a massive nosedive, plunging by 18.1 percent to 91.75 kronor. Shares in Lundin Petroleum closed the day at 47.1 percent, a drop of 9 percent.