Fears about the world banking system spread to Europe on Wednesday as shares in the globally connected Swiss bank Credit Suisse plunged and dragged down other major European lenders in the wake of bank failures in the United States.
At one point, Credit Suisse shares lost more than a quarter of their value, hitting a record low after the bank's biggest shareholder -- the Saudi National Bank -- told news outlets that it would not put more money into the Swiss lender, which was beset by problems long before the U.S. banks collapsed.
But Switzerland's central bank announced late Wednesday that it was prepared to act, saying it would support Credit Suisse if needed. A statement from the bank did not specify whether the support would come in the form of cash or loans or other assistance. At the moment, regulators said, they believe the bank has enough money to meet its obligations.
The stock has suffered a long, sustained decline: In 2007, the bank's shares traded at more than 80 francs each. The turbulence came a day ahead of a meeting by the European Central Bank. President Christine Lagarde said last week, before the U.S. failures, that the bank would "very likely" increase interest rates by a half percentage point to fight against inflation. Markets were watching closely to see if the bank carries through despite the latest turmoil.
Leaving a Credit Suisse branch in Geneva, Fady Rachid said he and his wife are worried about the bank's health. He planned to transfer some money to UBS. In order to earn some yield, banks "needed to take more risks, and some banks did this more prudently than others."
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