Trading in its shares was halted late morning after they fell by a fifth to fresh record lows.

The head of Credit Suisse’s largest investor, the Saudi National Bank, told Reuters it would not buy any more shares due to a ‘regulatory issue’. “We cannot because we would go above 10 per cent… all new rules kick in whether it be by our regulator or the Swiss regulator or the European regulator. We’re not included to get into a new regulatory regime,” SNB chairman Ammar Al Khudairy said.

The Saudi bank holds a 9.88% stake in Credit Suisse that was acquired last year and is committed to investing up to 1.5 billion Swiss francs, or US$1.5 billion.

Switzerland’s second-biggest bank is seeking to recover from a string of scandals that have undermined the confidence of investors and clients. Customer outflows in the fourth quarter rose to more than 110 billion Swiss francs or US$120 billion, Reuters reported.

Al Khudairy, however, indicated SNB is happy with Credit Suisse’s turnaround plan and said, “I don’t think they will need extra money… if you look at their ratios, they’re fine. And they operate under a strong regulatory regime in Switzerland and in other countries.” On SNB exiting Credit Suisse, Al Khudairy said this would happen when ‘proper value to the shares had been acquired’.

SVB contagion hits Credit Suisse, bank stocks?

Fears over Credit Suisse’s future have been compounded by last week’s fall of United States-based Silicon Valley Bank and Signature Bank; the main indices in Paris and Milan fell by over three per cent and those in London and Frankfurt by around 2.5 per cent.

Across Europe Wednesday bank stocks came under pressure again as regulators and financial executives scramble to re-assure investors amid fear of contagion from the SVB crisis.

Nevertheless, worries persist about the health of smaller institutions in particular as rapid interest rate rises make it harder for some (smaller) businesses to pay back or service loans they took from banks, increasing chances of losses for lenders who are also worried about a recession.

European Central Bank policymakers are still leaning towards a half-percentage point rate hike Thursday, a source told Reuters, as they expect inflation will remain too high in coming years.

Over in the United States, the focus is shifting to tighter regulations for banks – particularly mid-tier ones like SVB and Signature Bank – as president Joe Biden vows action against those responsible.