Stock markets are in turmoil with banking shares falling sharply on Wednesday as investors remain nervous following the collapse of Silicon Valley Bank (SVB) in the US last week.
The failure of SVB has raised fears that other banks could also be facing problems.
Shares in Swiss banking giant Credit Suisse hit a new low after they plunged by 20%. The fall came after Credit Suisse’s largest investor said it could not give the bank any more financial help.
Customers withdrew billions from Credit Suisse last year, contributing to the bank’s biggest annual loss since the global financial crisis in 2008. And the blows keep coming for Switzerland’s second-biggest bank.
On Tuesday, it acknowledged “material weakness” in its financial reporting and scrapped bonuses for top executives.
French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank were facing difficulties.
Several bank stocks were halted, triggering automatic circuit breakers designed to give investors a breather and prevent stocks from rapidly collapsing.
Stock markets are down due to banking concerns
Share indexes across Europe – including the UK’s FTSE 100 – were down by about 2.5% by mid-morning. The FTSE 100 has fallen 6% in the past week to reach a three-month low.
The Dow opened the day with a decline of more than 600 points Wednesday as banking fears spread across global markets. The S&P and Nasdaq slipped roughly 2% and 1.5%, respectively.
On Monday, United States President Joe Biden sought to reassure Americans that the banking system is “safe” following the collapse of Silicon Valley Bank (SVB).
The president also promised to introduce new banking regulations and made further assurances to United States taxpayers that their tax dollars would not be used to cover the collapse of SVB.
At the time of its collapse on March 10, SVB was the 16th largest bank in the United States. The collapse of SVB is the second-largest bank failure in the country’s history.