Financials fall as Credit Suisse becomes sector’s latest crisis

A man walks by a Credit Suisse branch in Vevey, western Switzerland, March 15, 2023

Fabrice Coferini | AFP | Getty Images

Bank stocks under pressure on Wednesday as bank shares tumble credit suisse Parts of the market, already reeling from the collapse of two large banks last week, were unnerved.

shares of swiss banks down more than 27% After its biggest backer said it would not provide further financial support. Credit Suisse announced Tuesday that it found “material weakness“Over the course of its financial reporting in previous years. Other European banks also fell, with Deutsche Bank down 8%.

The move also appeared to hit big U.S. banks.shares FuGuo bank and Citibank Both fell more than 4 percent in premarket trading, while Bank of America down 3%. JPMorgan and Goldman down more than 2%.

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Shares of Wells Fargo came under pressure Wednesday.

Credit Suisse’s struggles follow Silicon Valley Bank and signature bank In the U.S., those failures sent regional bank stocks sharply lower on Monday.this SPDR S&P Regional Bank ETF (KRE) It was down more than 4% in premarket trading on Wednesday. Zion Bank and Western Union average decline of more than 6%.

Peter Boockvar of Bleakley Financial Group said that while Credit Suisse’s woes appear to be unrelated to mid-sized U.S. banks, the combination of the two issues could trigger a broader re-examination of the banking system by investors.

“What this tells us is that banks are likely to engage in massive credit expansion and contraction [to] Focus more on strengthening the balance sheet than focusing on lending,” Boockvar said on CNBC.scream box

He added: “It’s a rethink of the market’s balance sheets. Also, you have to wonder if a lot of these banks have to start going out and raising equity.”

In this spirit, Wells Fargo continues to Tuesday The application is to raise $9.5 billion through the sale of debt, warrants and other securities. The bank said the new cash would be used for general corporate purposes.

The fallout from SVB’s collapse could also lead to more regulation and higher costs for the U.S. banking industry, including potentially higher fees for regulators to cover deposit insurance.

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