As Credit Suisse’s largest shareholder rules out injecting additional funds into the troubled lender, concerns over the banking sector have deepened, leading to a decline in the stock markets.
Both the FTSE 100 and the FTSE 250 have fallen by 2.2% and 2.5% respectively today, following a prolonged period of volatility that started with the Silicon Valley Bank’s collapse. Credit Suisse’s shares have tumbled another 20% to reach a new all-time low, plummeting by 29% over the last three trading sessions.
#CreditSuisse shares hit another all-time low, falling 21% before shares were halted from trading. Causing a decline in bank stocks. #LLOY shares have dropped by 4% to 46p #HSBC by 4% to 554p #BARC shares have declined by 6%, and #NWG shares have fallen by 4.9%. https://t.co/3psxAWdw3L
— Share_Talk ™ (@Share_Talk) March 15, 2023
Ammar Al Khudairy, chairman of the Saudi National Bank, has affirmed that his company will not invest any more capital into Credit Suisse, with the likelihood of scandal-plagued lenders defaulting on loans reaching a record high.
The British banking sector has taken the biggest hit, with banking stocks across the FTSE 350 falling by 4.4% this morning and by 11% over the last four days of trading. Meanwhile, the stock markets have also declined as Jeremy Hunt is set to confirm a rise in corporation tax from 19% to 25% during his fiscal statement in the Commons this afternoon.
The selloff surrounding Credit Suisse is affecting the shares of other European banks as well. BNP Paribas, Societe Generale, and Commerzbank have all decreased by approximately 10%.
In the UK, Barclays has fallen by 7.1%, NatWest by 4.9%, and HSBC by 4.4%. Credit Suisse’s shares remain down by 19.4%, following the announcement of the Saudi National Bank, its largest shareholder, that it will not invest any more capital into the distressed bank.
As a decline in Credit Suisse’s share price leads to losses across Europe’s banking sector, France’s finance ministry has declined to comment on the significant drops in the share prices of the country’s top banks. Trading in BNP Paribas was briefly suspended this morning, with its shares decreasing by approximately 10%, alongside fellow French bank Société Générale. Additionally, Crédit Agricole’s shares are down by 5.4%.
According to Reuters, Credit Suisse Group’s Saudi backer has expressed satisfaction with the bank’s transformation plan and does not believe that the Swiss lender will require additional funds. Ammar Al Khudairy, the chairman of Saudi National Bank, described Credit Suisse as an opportunistic investment, and the value realization of that investment will be revealed as the Swiss bank demonstrates its turnaround.
Al Khudairy stated in an interview with Reuters that “We are happy with the plan, the transformation plan that they have put forward. It is a very strong bank. I don’t think they will need extra money; if you look at their ratios, they’re fine. And they operate under a strong regulatory regime in Switzerland and in other countries.” He added that SNB’s investment goal is not dependent on time, and the Saudi bank will exit when the proper value to the shares is acquired.
