London: Shares in European banks got pummeled again on Wednesday, as Credit Suisse plunged to fresh record lows after the lender’s biggest shareholder said it could not raise its 10 per cent stake citing regulatory issues.
Credit Suisse shares plunged over 30 percent to new record lows after its main shareholder said it would not provide more financial assistance to the embattled Swiss banking giant.
Trading in the shares was halted a number of times by the stock exchange operator as volumes soared and the stock plummeted.
An index of European bank stocks fell in morning trading and was last down 5 per cent, hitting its lowest level since January 4. The index has lost 13 per cent in value since last Wednesday, marking its biggest week-on-week loss since Russia’s attack on Ukraine last February.
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“Markets are wild. We move from the problems of American banks to those of European banks, first of all Credit Suisse,” said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan.
“This is dragging lower the whole banking sector in Europe.
The shares accelerated losses after the Saudis (commented) ...I believe Credit Suisse’s crisis can be solved and the bank will not be let to go belly up,” Franchini said.
Shares in Swiss bank UBS were last down 6.8 per cent.
French banks BNP Paribas and Societe Generale saw declines of 8.7 per cent and 9.5 per cent, respectively.
Spanish bank Banco de Sabadell and Germany’s Commerzbank fell by 6.5-7.5 per cent.
No more share purchase
The head of Credit Suisse Group’s largest shareholder, Saudi National Bank (SNB), said on Wednesday it would not buy more shares in the Swiss bank on regulatory grounds.
“We cannot because we would go above 10 per cent. It’s a regulatory issue,” SNB chairman Ammar Al Khudairy said in an interview with Reuters. The Saudi bank holds a 9.88 per cent stake in Credit Suisse, according to Refinitiv data.
Trading in the Swiss bank’s shares was halted late morning as they fell by a fifth to fresh record lows, having been pummelled earlier in the week in market fallout from the collapse of Silicon Valley Bank.
Switzerland’s second-biggest bank is seeking to recover from a string of scandals that have undermined the confidence of investors and clients. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs ($120 billion).
Al Khudairy said SNB was happy with Credit Suisse’s turnaround plan and did not think it would need more money, but also described his bank’s investment as an opportunistic one that was not time-dependent. The Saudi bank would exit when proper value to the shares had been acquired, he added.
