European banking shares were hammered on Wednesday as confidence in the sector already rattled by the collapse of Silicon Valley Bank in the US was knocked further by a fall of more than 25% in the value of Credit Suisse.
Shares in the Swiss bank crashed 29% to USD1.78, hitting an all-time low, with trading earlier halted amid the heavy, and fast-paced sell-off.
The declines came after the chair of the Saudi National Bank, which bought a 10% stake in Credit Suisse last year, ruled out providing the bank with any more financial assistance and sparked heavy falls across Europe.
Some of Europe’s leading financial institutions saw share prices slump with the Euro Stoxx Banks Index tumbling 8% as trading curbs saw trading in a number of banks temporarily halted.
Fears of contagion gripped the markets with concerns that banks are sitting on large unrealised losses in their bond portfolios and might not have sufficient buffers if there is a fast withdrawal of deposits.
In London, Barclays slipped 8.3%, NatWest 5.9%, HSBC 5.3% and Lloyds 5%.
Across the channel the mood was more downbeat. In France, BNP Paribas dipped 11%, Societe Generale slumped 11% and Credit Agricole fell 5.6% while in Germany, Deutsche Bank tumbled 8.6% and Commerzbank slid 10%.
In Italy, shares in UniCredit and Banca Monte dei Paschi di Siena both declined 7.5% while in Spain Banco Santander (LSE:BNC) fell 8.2% and Banco Bilbao Vizcaya tumbled 10%.
In pre-market trading in the US, Wells Fargo and Citigroup down 5% while Goldman Sachs (NYSE:GS) was 3.3% lower.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said 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.”
“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.”