By Scott Kanowsky
Investing.com -- Shares in Credit Suisse Group AG (SIX: CSGN ) plunged by as much as 30% on Wednesday, touching a fresh all-time low, after the Swiss bank's largest stakeholder announced that it would no longer provide further capital injections.
In an interview with Bloomberg Television, Saudi National Bank chairman Ammar Al Khudairy said it will "absolutely" not be placing more investments into Credit Suisse Group. Saudi National Bank has a 10% stake in the company.
The lender had previously flagged this week that its auditor had found "material weaknesses" in its financial reporting controls.
The concerns around Credit Suisse had a knock-on effect on its peers across Europe's banking sector. France's Societe Generale (EPA: SOGN ) dropped by over 9%, while domestic peer BNP Paribas SA (EPA: BNPP ) decreased by more than 8%. ING Groep (AS: INGA ) in the Netherlands, Spain's Banco Santander (BME: SAN ), as well as German lenders Deutsche Bank (ETR: DBKGn ) and Commerzbank (ETR: CBKG ), all saw losses of over 5%.
Analysts at Citi noted that Al Khudairy's comment itself may not be enough to explain the size of the drop in the market move. They added that Credit Suisse's credit default swaps are trading at an elevated level, which, although not an immediate problem for the business, may have an impact on customer deposit behavior or the price of any new debt issuance.
At the moment, the cost of insuring Credit Suisse bonds against a possible default are edging closer to a level that can spark major worries among investors.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.