All it took was a few tough words from Credit Suisse Group AG's biggest shareholder on Wednesday to spark a selloff that quickly spread across global markets.
Asked whether Saudi National Bank was open to further cash injections, Chairman Ammar Al Khudairy said "absolutely not." It was a reminder about the precarious situation facing the Swiss bank just one day after its CEO, Ulrich Koerner, had sought to shore up investor confidence by pointing to signs of improvement in its business.
Credit Suisse's shares plummeted some 20%, its biggest one-day selloff on record.
Its bonds fell to levels that signal deep financial distress, with securities due in 2026 dropping 20 cents to 67.5 cents on the dollar in New York. That puts their yield over 20 percentage points above U.S. Treasuries, according to Trace.
For global investors still on edge after the rapid-fire collapse of three regional U.S. banks, the growing Credit Suisse crisis provided a new reason to sell risky assets and pile into the safety of government bonds.
Benchmark indexes in Europe sank more than 2% and the S&P 500 lost 1.2%. Short-term German bonds and Treasuries soared, pushing their yields down by more than 40 basis points.
"Markets are very sensitive to the negative news flow after the surprise of seeing a US bank disappear from one day to the other," said Francois Lavier, head of financial debt strategies at Lazard Freres Gestion. "In a context where market sentiment is already weakened, not much is needed to weaken it even further."
Societe Generale SA, BNP Paribas SA and Banco de Sabadell SA fell more than 10%, leading the decline in the Stoxx 600. Among European banks, more than $60 billion in combined market value was wiped out on Wednesday.
In the U.S., the losses were smaller but banks, especially regional ones, were hit hard.
