ZURICH (Reuters) – Banking stocks tumbled in Europe on Wednesday, with Credit Suisse’s plunge to an all-time low heightening investor fears for the wider sector following the collapse of Silicon Valley Bank (SVB).
Credit Suisse fell below two Swiss francs for the first time in its history, the main shareholder of the Swiss bank having declared that it could not provide additional financial assistance.
“We can’t because we would go over 10% (in capital). It’s a regulatory issue,” Saudi National Bank (SNB) chairman Ammar Al Khudairy said on Wednesday.
The Saudi bank acquired a nearly 10% stake in the capital of Credit Suisse last year after participating in its fundraising and committing to inject up to 1.5 billion Swiss francs (1.53 billion euros).
On the Zurich Stock Exchange, the title Credit Suisse was suspended on a fall of 21.88% to 1.75 francs, by far the largest drop in the Stoxx 600, and the cost of insurance against a risk of default of the bank on its bond debt increases.
As a result, the Stoxx banking index lost 6.04% around 11:25 GMT. In Paris, Societe Generale fell by 10.5%, BNP Paribas by 10.47% and Crédit Agricole by 6.03%.
Credit Suisse released its 2022 report on Tuesday in which it said it had identified “significant weaknesses” in internal controls over financial reporting.
Switzerland’s second-largest bank is trying to recover from a series of scandals that have significantly damaged investor and customer confidence. In the fourth quarter, customer outflows reached more than 110 billion Swiss francs.
Credit Suisse’s setbacks add to the global alert triggered by the bankruptcies of US banks SVB and Silvergate last week, although regulators and governments have tried to quell fears of contagion.
“The markets are unleashed. We are moving from the problems of American banks to those of European banks, first and foremost Credit Suisse,” said Carlo Franchini, at Banca Ifigest.
“This situation is dragging the entire European banking sector down. Stocks accelerated their losses after the Saudis’ comments…I believe the Credit Suisse crisis can be resolved and the bank will not be left bankrupt. “, added the expert.
(Noele Illien, Laetitia Volga, edited by Blandine Hénault)
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