Get All Access for $5/mo

This 'Problem Child' Bank in Europe Is Triggering Anxiety About the Financial System, Again Credit Suisse, a Switzerland-based bank, saw its stock plunge by about 30% from Tuesday to Wednesday.

By Gabrielle Bienasz

Opinions expressed by Entrepreneur contributors are their own.

FABRICE COFFRINI / Contributor I Getty Images
Credit Suisse in Switzerland.

Sometimes a problem child acts out in class, and sometimes they rattle the global banking sector.

Panic over the collapse of two banks in the U.S. might have gone truly global this week as shares in a Switzerland-based bank, Credit Suisse Group AG, cratered nearly 30% from Tuesday to Wednesday.

Per the New York Times, the S&P 500 in the U.S. and markets in Europe took dings as investors seemed spooked by ongoing issues with Credit Suisse and the failure of Signature Bank and Silicon Valley Bank (SVB).

The S&P 500 was down about 1.6% from Tuesday.

Related: 'Everyone Is Freaking Out.' What's Going On With Silicon Valley Bank? Federal Government Takes Control.

Over the past week, the federal government seized control of two banks (and secured customer deposits) after disclosed losses from SVB triggered a bank run, the latter of which Signature Bank said it also experienced. Financial systems are interconnected, and it's easy for something called "contagion" to happen, where struggles in one area spread to another.

Regional bank stocks in the U.S. picked back up on Tuesday, but anxiety roared back when Credit Suisse, something of a European banking "problem child," per the Wall Street Journal, said issues in its system produced flaws in its financial reporting — not ones that changed its results meaningfully, but enough to cause concern, the outlet added.

Then, Saudi National Bank (SNB), the biggest shareholder of the bank, said on Bloomberg TV that it couldn't help out Credit Suisse anymore, per the WSJ. The bank owns 9.9% of Credit Suisse.

"It's a regulatory issue," the chairman of the SNB, Ammar Al Khudairy, told Reuters. "We cannot because we would go above 10%."

Related: Billionaire Charles Schwab Has Lost Nearly $3 Billion of Personal Wealth Since Silicon Valley Bank Collapse

Major banks in Europe also saw stock pauses and declines of over 10% in share price, per news reports. Whether the contagion will be contained also remains to be seen.

Credit Suisse Chairman Axel Lehmann defended the bank in a panel this week, per CNBC.

"We are regulated, we have strong capital ratios, very strong balance sheet. We are all hands on deck. So that's not the topic whatsoever," he said, referring to help from the government.

The bank was already raising eyebrows in the fall after several scandals, which include pleading guilty to not succeeding at preventing money laundering in June, being forced to pay damages after an advisor committed fraud, and a scandal that involved defrauding investors over a tuna investment loan, per Reuters.

Gabrielle Bienasz is a staff writer at Entrepreneur. She previously worked at Insider and Inc. Magazine. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Starting a Business

He Started a Business That Surpassed $100 Million in Under 3 Years: 'Consistent Revenue Right Out of the Gate'

Ryan Close, founder and CEO of Bartesian, had run a few small businesses on the side — but none of them excited him as much as the idea for a home cocktail machine.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Franchise

The Top 10 Coffee Franchises in 2024

From a classic cup of joe to a creamy latte, grab your favorite mug and get ready to brew up success with the best coffee franchises.

Marketing

How Small Businesses Can Leverage Dark Social to Drive Word-of-Mouth Marketing

Dark social accounts for 70% of social media shares and is crucial for small businesses. Here's how you can tap into this hidden marketing opportunity.

Business News

'Jaw-Dropping Performance in 2024,' Says a Senior Analyst as Nvidia Reports Earnings

Nvidia reported its highly-anticipated third-quarter earnings on Wednesday.

Business News

'Do You Sell Cars?': Tesla CEO Elon Musk Trolls Jaguar Rebrand on X

The team running Jaguar's X account was working hard on social media this week.