FEARS over embattled bank Credit Suisse’s health wiped around £75billion off London’s biggest market yesterday after triggering a European financial sell-off.
The FTSE 100 closed down 292.66 points, or 3.83 per cent, to 7,344.45 — a bigger loss than the market meltdown triggered by autumn’s mini-Budget.
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Shares in Credit Suisse tumbled as much as 30 per cent after its biggest investor, Saudi National Bank, ruled out pumping in more cash support.
One day earlier the Zurich-based bank had admitted its auditor had found “material weakness” in its financial reporting.
Economist Nouriel Roubini, who predicted the 2008 financial crisis, warned Credit Suisse could be another “Lehman moment”.
He said the lender was “too big to fail and too big to be saved”.
Earlier in the day, its shares were repeatedly halted amid wild trading, as contagion fears spread rapidly across global markets.
Last night the Swiss central bank said it was ready to provide Credit Suisse with financial support.
Simon French, from Panmure Gordon, said the impact could dwarf recent financial woes, adding: “Credit Suisse collapsing would make Liz Truss look like an amateur.”
Barclays shed nine per cent, HSBC lost almost five per cent, Germany’s Commerzbank lost nine per cent and France’s Societe Generale dropped 12 per cent.
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The market rout comes days after banking shares were punished in the wake of the collapse of tech-focused US lender SVB.
Danni Hewson, from AJ Bell, said: “This is an altogether different situation, but panic is a powerful force, and that force has exerted huge pressure on markets today.”
Markets are betting recent weakness in bank shares will prompt the Bank of England and European Central Bank to pause interest rate rises, which have resulted in the cost of borrowing being more expensive.
