Banking stocks are enduring fresh, steep losses on Wednesday as concern over the health of US banks crosses the Atlantic.

Credit Suisse shares plunged to new record lows – dropping by almost a third at one stage – following comments by its largest investor that it could not provide the Swiss bank with more financial assistance.

Switzerland’s second-largest bank, no stranger to crisis over the past few years, has seen concerns for its financial health come into sharper focus since the collapse of Silicon Valley Bank last week.

The attention of investors has mostly been on the ability of lenders to absorb the aggressive tightening of interest rates since last year which has made it more difficult to service their debts.

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Adding to the early selling mood was speculation that the European Central Bank (ECB) planned to raise its core deposit rate by 0.5 percentage points this Thursday as part of its continued efforts to tackle inflation.

A source close to the ECB Governing Council, the Reuters news agency reported, had said that the ECB was unlikely to ditch plans for a big rate move this week because that would damage its credibility.

Markets, on Wednesday morning, were pricing in a 90% chance of a 0.5 percentage point hike.

However, given the scale of the market mayhem facing financial services firms, the probability had dropped to 20% by late Wednesday afternoon.

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Credit Suisse shares were 30% lower at one stage.

Other European banking stocks have also fallen, albeit not as badly, with Sabadell, TSB’s Spanish parent, down 11% and Commerzbank, Germany’s second largest lender, down 10%.

Spain’s IBEX was more than 4% down while the Italian MIB and CAC 40 in Paris were off by more than 3.5%.

In London, the FTSE 100 was trading almost 3% down in early afternoon trading, below the level it had started 2023.

Insurers and asset managers joined banks in bleeding further value.

Barclays and Standard Chartered were down by nearly 9%.

US equity markets also opened lower with financial stocks leading the way. The Dow Jones Industrial Average was 2% down.

Other significant market moves caught the eye as Brent crude oil tumbled to its lowest level in more than a year, falling 6% to $72 dollars a barrel, with market analysts citing the uncertainty gripping financial stocks.

Attention, however, was firmly focused on Credit Suisse.

Its largest shareholder, Saudi National Bank (SNB), said it would not buy more shares on regulatory grounds as it would take its stake above 10%.

A string of scandals have undermined the confidence of its investors and clients, with Credit Suisse customer outflows in the fourth quarter rising to more than 110 billion Swiss francs (£100bn)

SNB said it was happy with Credit Suisse’s turnaround plan and did not think it would need more money.

That was despite its annual report for 2022, released earlier this week, admitting that “material weaknesses” in controls over financial reporting had been identified and customer outflows had not yet been stemmed.