© Reuters. FILE PHOTO: A logo is seen at the Credit Suisse bank in Geneva, Switzerland, February 22, 2023. REUTERS/Denis Balibouse/
By Lucy Raitano and Danilo Masoni
LONDON (Reuters) – European bank shares fell again on Wednesday as Credit Suisse plunged to new record lows after the bank’s main shareholder said it could not increase its 10% stake citing regulatory problems.
Credit Suisse fell below 2 Swiss francs ($2.18) for the first time after the Saudi National Bank said it could not exceed 10% ownership due to a regulatory issue.
Credit Suisse shares fell as much as 23.8% with the latter down 20.2%. The stock exchange trader halted trading in the shares several times as volumes soared and shares plunged.
An index of European bank shares fell in morning trading and was down 6.1%, hitting its lowest level since January 3. The index has fallen 14% since last Wednesday’s close, meaning a loss of more than 120 billion euros ($127.25 billion) in market value. Since then. It is the largest weekly loss for the index since the Russian invasion of Ukraine last February.
Contagion fears after collapse of New York-based tech-focused lender SVB signature bank (NASDAQ:) last week weighed on the shares of European banks.
“The markets are wild. We went from the problems of US banks to those of European banks, first of all Credit Suisse,” said Carlo Franchini, head of institutional clients at Banca Ifigust in Milan.
“This is dragging down the entire banking sector in Europe. Stocks accelerated losses after the Saudis (commented)… I think the Credit Suisse crisis can be resolved and the bank will not be allowed to go bankrupt.” Franchini said.
Shares in Swiss bank UBS fell 6.8%. French banks BNP Paribas (OTC:) and Societe Generale (OTC:) were down more than 11%.
Spain’s Banco de Sabadell fell 9% and Germany’s Commerzbank (ETR:) fell almost 10%, while german bank (ETR:) shares fell 8.4%.
“The fact is that European banks, and especially the larger ones, manage their interest rate risk much better, which is what caused the three US banks to collapse, and they have liquidity,” said Jerome Legras, head of research at Axiom Alternative Investments.
($1 = 0.9189 Swiss francs)
($1 = 0.9430 euros)
