Silicon Valley Bank’s collapse should set off alarm bells at financial institutions worldwide. Those words were spoken on Wednesday morning by Axel Lehmann, chairman of European banking giant Credit Suisse. The crisis demands stricter input from regulators and more oversight when it comes to midsize banks in the U.S., Lehmann said during a CNBC panel discussion in Riyadh, Saudi Arabia, Wednesday, adding that the banking sector needs to take a closer look at managing its fundamentals. But after a dramatic bank stock rout on Wednesday, it looks like Credit Suisse itself could be the catalyst for an even larger banking crisis.
Just as Lehmann was speaking in Riyadh Wednesday, Credit Suisse shares were in the process of sinking to a record low before trading was halted. The rout occurred after the bank’s largest remaining shareholder, the Saudi National Bank, announced Wednesday it would not be increasing its 9.88% stake in the company, citing regulatory hurdles. “We cannot because we would go above 10%. It’s a regulatory issue,” SNB chairman Ammar Al Khudairy told Reuters Wednesday.
