Shares of major European banks, such as Credit Suisse and Societe Generale, as well as the Italian banks Monte dei Paschi and UniCredit, were suspended from trade on Wednesday after a highly volatile trading session.
European markets saw a sharp loss in early trading hours, after posting the biggest single-day gain in nearly three months the day before, as banking equities remained in negative territory following the Silicon Valley Bank fallout.
As of 17:41 hrs. Bangkok time, the Stoxx 600 index, which tracks stocks across Europe, was down 2.08%, with most industries and major exchanges also trading lower. The banking industry saw the largest decline (4.6%), followed by the retail sector (3.9%).
That’s despite upbeat activity in Asia-Pacific markets and on Wall Street overnight, where U.S. bank equities rallied on hopes that Silicon Valley Bank’s collapse was contained.
Upon disclosure of “material weaknesses” in its financial reporting processes for 2022 and 2021 on Tuesday, shares of Credit Suisse plunged to the bottom of the blue-chip index, and its share price had fallen by more than 21% by around 17.33 hrs., reaching its fresh record low.
The comment was made public by the Swiss bank in its annual report, which had been set to be released last Thursday but was postponed after a late call from the U.S. Securities and Exchange Commission (SEC).
Credit Suisse acknowledged in its annual report released on Tuesday that it has found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022.
These issues stem from a “failure to design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements” as well as other internal control and communication concerns.
Nonetheless, the bank stated that it could confirm that its financial statements for the years in concern “fairly present, in all material respects, [its] consolidated financial condition.”