Shares of Credit Suisse tank after Saudis refuse to offer more aid

U.S. banks aren’t the only ones having problems. Shares of Credit Suisse took a nosedive of more than 20% after Saudi backers said they would not increase their investment in the Swiss bank.

“The answer is absolutely not, for many reasons. I’ll cite the simplest reason, which is regulatory and statutory. We now own 9.8% of the bank — if we go above 10% all kinds of new rules kick in, whether be it by our regulator or the European regulator or the Swiss regulator,” Ammar Al Khudairy, chairman of the Saudi National Bank, told Bloomberg.

His comments, which were repeated to Reuters, come at a tenuous time for Credit Suisse and the banking industry writ large.

The Biden administration is taking extraordinary measures to make depositors whole and shore up the U.S. banking sector after the Silicon Valley Bank failed. There was a run on deposits last week at the nation’s 16th-largest bank, which focused on the battered tech sector.

The fall of SVB, as well as cryptocurrency-focused Signature Bank, has prompted emergency rescue action from regulators and roiled financial markets.

Credit Suisse is outside of the Biden administration’s purview, and its downturn in fortunes had a ripple effect on other European banks. Shares of French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank fell between 8% and 10%, according to CNN Business.

U.S. markets weren’t immune to the turmoil. The Dow Jones Industrial Average dropped 500 points after the opening bell, and American bank stocks were down by single-digit percentage points.

The Saudis are pumping the brakes as Credit Suisse undertakes a major overhaul. Large withdrawals and questions about its financial reporting prompted a major restructuring that included layoffs and changes at the executive level.

Credit Suisse Chairman Axel Lehmann declined to say Wednesday if he thinks the bank would need government intervention.

“We are regulated, we have strong capital ratios, very strong balance sheet,” Mr. Lehmann told CNBC in Riyadh, Saudi Arabia. “We are all hands on deck. So that’s not the topic whatsoever.”