Why Credit Suisse is the latest bank to face trouble this week

Days after two U.S. banks failed, a Swiss bank is now in crisis. Credit Suisse shares sank as much as 30% Wednesday, hitting a new record low and dragging down global markets already jittery from bank instability.

The fallout is not related to the demise of Silicon Valley Bank and Signature Bank, but the timing likely caused a more visceral reaction to the Swiss bank’s troubles.

On Tuesday, Credit Suisse released its annual report, revealing “material weakness” that could lead to misstatements in its financial reporting. Then on Wednesday, the bank’s largest shareholder, Saudi National Bank, said it won’t buy more shares to help Credit Suisse, helping fuel the rout.

“We now own 9.8% of the bank. We go above 10%, all kinds of new rules kick in, whether it be by our regulator or European regulator or the Swiss regulator, and we’re not inclined to get into a new regulatory regime,” Saudi National Bank Chairman Ammar Al Khudairy said during a Bloomberg TV interview.

Economists argue that the survival of Credit Suisse is a much bigger deal for the global economy than the U.S. regional banks that have struggled in the past week. The investment bank has much broader exposure. It is Switzerland’s second largest bank and does substantial business around the world.

“It’s definitely a much bigger concern for the global financial sector. It’s partly because it’s bigger, its balance sheet is about 2.5 times as big as SVB,” Capital Economics Chief Europe Economist Andrew Kenningham told Reuters. “But the more important difference is that Credit Suisse has a lot of links to the financial sectors in other countries, so it has operations in the U.S., in other parts of Europe and more widely around the world and it will have a lot of creditors and subsidiaries elsewhere who potentially could get into difficulties if Credit Suisse in Switzerland were to have trouble.”

Bloomberg reported Wednesday that the Federal Reserve is actively reviewing the U.S. financial sector’s exposure to Credit Suisse amid the turmoil.