The stock market rout for the global banking sector is expected to get worse after Moody's downgraded lenders, with the US and Europe hit the hardest. Before a rebound, Western Alliance Bancorp and First Republic Bank had crashed as much as 75 per cent, as other lenders suffered the fallout of SVB and Signature Bank's collapse.
Now European banks are being dragged down by chaos among investors, with Credit Suisse stocks taking a 28 per cent plunge.
What pushed the Swiss lender downhill?
The dip comes after the Swiss bank's biggest investor Saudi National Bank refused to provide further financial support, to the bank linked to several scandals in the past couple of years.
A major blow to the credibility of Switzerland's second-largest bank came in 2021, when its investors lost $3 billion, as Credit Suisse had provided $10 billion to Greensill Capital that declared insolvency.
In 2022, a data leak revealed that $100 billion deposited at Credit Suisse belonged to drug lords, money launderers and those who indulged in corruption and torture.
Investor losing patience within months?
All this triggered an unprecedented withdrawal of deposits by wealthy clients in October 2022, which hasn't turned around so far.
Saudi National Bank had bought a 10 per cent stake in Credit Suisse late in 2022 for more than $1.5 billion, to become its largest share holder.
But Credit Suisse's stock, which has crashed by 81 per cent since 2021, hasn't stopped sliding down, and Saudi National Bank lost $542 million in months.
Cliffhanger for Switzerland's second-largest bank?
Like Silicon Valley Bank, trading was halted in Credit Suisse stocks as well, as its share prices have hit an all time low.
As it looks for investors amidst the gloom in the banking sector, Credit Suisse is betting big on an IPO for its carved out bank First Boston in 2025.
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