European stocks were in free fall on Wednesday as fears about the health of the European banking sector rattled markets.
The FTSE 100 and the German Dax sank over 2.5% at the time of writing while the French CAC and the Italian FTSE MIB were down around 3.5%.
Just as fears about SVB’s collapse appear to subside, investors in European banks were struck down by concerns about Credit Suisse.
Credit Suisse shares were down 20% after their biggest investor, the Saudi National Bank, said they would not pump more cash into the institution. Credit Suisse’s auditor had recently found problems with their financial controls and today’s developments sent the shares deep into the red.
“The fresh banking sell-off has taken hold as fears rise to the surface about the robustness of sector with the shadow of the SVB collapse still looming large. With the US banking sector downgraded to negative by Moody’s nervousness is super-high and that’s spilt over into a hot mess in Europe,” said said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
The coming hours and days will be crucial not only for Credit Suisse, but for the European banking sector and broader indices. European banks were sold heavily and many were halted to regulate trade.
“The banking rout has taken on another ominous twist with trading halted in shares of big European banks including Credit Suisse, Société Generale, BNP Paribas, Monte dei Paschi and UniCredit,” said Susannah Streeter.
FTSE 100 banks were crushed. Barclays was down in excess of 7%, as was Standard Chartered. Lloyds was down over 4%.
Prudential was the FTSE 100’s top faller after disappointing full year results were exacerbated by the banking sector rout.