Troubles at Swiss banking giant Credit Suisse spooked markets on Wednesday, sending bank shares selling off after regaining some ground on Tuesday.
The sell-off was sparked in part when Credit Suisse’s largest shareholder, the Saudi National Bank, said publicly that it would not strengthen your investment to help stabilize the beleaguered Swiss lender. Shares of Credit Suisse plummeted roughly 25% on Wednesday to hit a record low.
Citibank shares fell as much as 5%, while Goldman Sachs, JPMorgan and Wells Fargo fell about 4% on Wednesday. Bank of America shares were trading about 3% lower.
The Dow and S&P indices fell more than 1.4% on Wednesday morning, with the tech-heavy Nasdaq trading at least 1% lower. Even markets for assets that are normally considered safe, such as US government bonds, have fallen sharply as well.
Widespread jitters in Europe and the US, coming days after US regulators took over and closed two banks, have raised new concerns about troubles in the global financial sector.
Some of those tremors are to be expected, analysts say, because banking around the world is so interconnected and because investors who see instability in one part of the industry tend to scan the horizon for other threats, reflecting those concerns in their stock transactions.
“Credit Suisse is not just a Swiss problem but a global one,” Andrew Kenningham, chief Europe economist at Capital Economics, a research and advisory group, warned clients in a note Wednesday.
That’s partly because Credit Suisse is so big — with $574 billion in assets, it’s more than twice the size of Silicon Valley Bank — and partly because the Swiss lender has long been seen as the «closest link in the world.» weak among Europe’s big banks», Kenningham. wrote.