Battered shares of Credit Suisse lost more than one-quarter of their value Wednesday, hitting a record low after its biggest shareholder — the Saudi National Bank — told outlets that it would not inject more money into the ailing Swiss bank.
The turmoil in the Credit Suisse stock price prompted an automatic pause in trading of the bank’s shares on Switzerland’s market and brought down shares of other European banks by as much as double digits. That fanned new fears about the health of financial institutions in the wake of the collapse of Silicon Valley Bank in the United States and worries about midsized lenders.
Credit Suisse stock was down more than 27% at around 1.6 Swiss francs in mid-afternoon trading on the SIX stock exchange Wednesday. That’s down more than 85% from February 2021.
The Swiss exchange says the drop in Credit Suisse shares triggered a temporary, automatic pause.
Other European banks were taking a battering amid concerns about the sector: France’s Societe Generale SA dropped 12%, France’s BNP Paribas fell more than 10%, Germany’s Deutsche Bank was down 8% and Britain’s Barclays Bank was down nearly 8%. Shares in the two French banks were briefly suspended.
The tumble came after Ammar Al Khudairy, the chairman of key Credit Suisse shareholder Saudi National Bank, told Bloomberg and Reuters that it has ruled out further investments in the Swiss bank to avoid regulations that kick in when it has a stake above 10%.
Saudi National Bank put in some 1.5 billion Swiss francs ($1.5 billion) to acquire a holding just under 10% as Credit Suisse looked to raise funding from investors last year and roll out a new strategy to overcome an array of troubles.
Those include bad bets on hedge funds, repeated shake-ups of its top management and a spying scandal involving Zurich rival UBS.
On Tuesday, Credit Suisse published its annual report for 2022 indicating that managers had identified “material weaknesses” in the bank’s internal control over financial reporting as of the end of last year. That fanned new doubts about the bank’s ability to weather the recent storm.