Fears about the world banking system spread to Europe on Wednesday as shares in the globally connected Swiss bank Credit Suisse plunged and dragged down other major European lenders in the wake of bank failures in the United States.
At one point, Credit Suisse shares lost more than a quarter of their value, hitting a record low after the bank's biggest shareholder - the Saudi National Bank - told news outlets that it would not put more money into the Swiss lender, which was beset by problems long before the U.S. banks collapsed.
A day earlier, Credit Suisse reported that managers had identified “material weaknesses” in the bank's internal controls on financial reporting as of the end of last year. That fanned new doubts about the bank's ability to weather the storm. France's Societe Generale SA dropped 12% at one point. France's BNP Paribas fell more than 10%. Germany's Deutsche Bank tumbled 8%, and Britain's Barclays Bank was down nearly 8%. Trading in the two French banks was briefly suspended.
He noted, however, that the bank's “problems were well known so do not come as a complete shock to either investors or policymakers.” The Swiss National Bank declined to comment. The Swiss Financial Market Supervisory Authority did not immediately respond to calls and emails seeking comment. European finance ministers said this week that their banking system has no direct exposure to the U.S. bank failures.
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