European banks battered as Credit Suisse drops over 20%

By Lucy Raitano and Danilo Masoni

LONDON (Reuters) -Shares in European banks got pummeled again on Wednesday, as Credit Suisse plunged to fresh record lows after the lender’s biggest shareholder said it could not raise its 10% stake citing regulatory issues.

Credit Suisse fell below 2 Swiss francs ($2.18) for the first time after Saudi National Bank said it could not go above 10% ownership due to a regulatory issue.

Credit Suisse shares fell by as much as 23.8% and were last down 20.2%. Trading in the shares was halted a number of times by the stock exchange operator as volumes soared and the stock plummeted.

An index of European bank stocks fell in morning trading and was last down 6.1%, hitting its lowest since January 3. The index has dropped 14% since last Wednesday’s close, meaning a loss of over 120 billion euros ($127.25 billion) in market value since then. It is the index’s biggest week-on-week loss since Russia’s invasion of Ukraine last February.

Fears of contagion after the collapse of tech-focused lender SVB and New York-based Signature Bank last week have weighed on European bank stocks.

“Markets are wild. We move from the problems of American banks to those of European banks, first of all Credit Suisse,” said Carlo Franchini, head of institutional clients at Banca Ifigest in Milan.

“This is dragging lower the whole banking sector in Europe. The shares accelerated losses after the Saudis (commented) …I believe Credit Suisse’s crisis can be solved and the bank will not be let to go belly up,” Franchini said.

Shares in Swiss bank UBS fell 6.8%. French banks BNP Paribas and Societe Generale were both down by over 11%.

Spanish bank Banco de Sabadell was last down 9% and Germany’s Commerzbank fell nearly 10%, while Deutsche Bank shares were down 8.4%.

“The fact remains still that European banks, and especially the bigger ones, have a much better management of their interest rate risk, which is what made the three U.S. banks collapse, and they have liquidity,” said Jerome Legras, head of research at Axiom Alternative Investments.

($1 = 0.9189 Swiss francs)

($1 = 0.9430 euros)

(Reporting by Lucy Raitano and Danilo Masoni; editing by Amanda Cooper, Jason Neely and Christina Fincher)