European, US Stocks Fall on Global Bank Worries
Major stock indexes in London, Paris and Frankfurt all plunged by more than 3% while three key U.S. indexes — the Dow Jones Industrial Average of 30 key stocks, the broader S&P 500 index and the tech-heavy Nasdaq index — also dropped, although by 1% or less in late-day trading. Asian markets increased, mirroring Tuesday gains in the U.S.
The newest worries centered on Credit Suisse, with shares for the beleaguered Swiss lender falling more than 17% after its biggest shareholder, the Saudi National Bank, said it would not invest more money in it.
Problems at Credit Suisse, with outlets in major global financial centers, predated the U.S. government takeover of operations at Silicon Valley Bank and Signature Bank in the last week.
Credit Suisse said Tuesday that managers had identified “material weaknesses” in the bank’s internal controls on financial reporting as of the end of last year.
But on Wednesday, Credit Suisse chairman Axel Lehmann, speaking at a financial conference in the Saudi capital of Riyadh, defended the bank’s operations, saying, “We already took the medicine” to reduce risks. “We are regulated. We have strong capital ratios, very strong balance sheet. We are all hands on deck.”
But with the drop in the share price for Credit Suisse, bank stocks in Britain, France and Germany also fell sharply, although not by as much as for Credit Suisse.
S&P Global Ratings said on Tuesday that the failures at the two U.S. banks would have little effect on the fortunes of European banks. But the S&P analysts added, “That said, we are mindful that SVB’s failure has shaken confidence.”
Share prices of other U.S. regional banks like Silicon Valley have fallen sharply in recent days.
Some information for this report came from The Associated Press.