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NEW YORK (Reuters) -On March 16, 2008, Bear Stearns was forced into the arms of JPMorgan Chase & Co in a dramatic weekend rescue after Wall Street turned on the investment bank, fearing it would collapse.
Fifteen years later, Credit Suisse Group AG found itself on a similar precipice. The Swiss lender, weakened by a series of scandals, had seen its already-low share price fall even further after the failure in recent days of two U.S. banks, SVB Financial Group and Signature Bank.
So, when Saudi National Bank Chairman Ammar Al Khudairy said his bank, the largest investor in Credit Suisse, could not give it more money, investors ran for the exits.
It didn't matter that Saudi National Bank also gave a reason - further investment would leave it with more than 10% of Credit Suisse's shares, a regulatory hurdle - and that it said it was happy with the Swiss bank's turnaround plan.
Nor did it matter that Credit Suisse Chief Executive Ulrich Koerner had been out over the past few days trying to reassure investors that the bank was strong, with enough capital and liquidity.
By the time traders in New York were switching on screens on Wednesday, Credit Suisse had lost more than a fifth of its value. Its five-year credit default swaps, an indicator of credit stress, spiked to a new record high.
The Swiss lender, investors saw, was not only much bigger than the regional U.S. banks that had failed in the past few days, but it was also an important cog in global financial plumbing and deemed sysemically important. They worried its problems could ripple through global markets in unexpected and devastating ways.
Regulators watched the stock fall with concern while rivals and clients scanned their books to see what exposure they had to the bank, according to interviews with multiple industry sources and statements from regulators. Some urged their counterparts in Switzerland to act quickly to save the bank.
"The thing that's keeping markets on their toes is we had SVB, then Signature Bank closing down; now it's Credit Suisse," said Robert Carnell, ING's head of research for Asia Pacific. "What next?"
Credit Suisse did not comment for this story but noted recent interviews given by its CEO saying the bank was strong.
As the day progressed on Wednesday, a crisis of confidence enveloped Switzerland's second-biggest bank.
An asset management company in New York was assessing its trading risk, examining what open positions it had with Credit Suisse, said a source at the company.
At a rival bank, an executive reported seeing more Credit Suisse deposits flowing in.