The Credit Suisse Group, Switzerland's second-largest bank, was hit with a sharp share price decline last Wednesday, after reporting material weaknesses in its financial reporting controls and as its largest shareholder demurred from injecting more funds for regulatory reasons.
These industry shocks have increased concerns over the general stability of the banking system in Europe and the United States.
Analysts believe that a quarter-point rate hike is possible tomorrow at the European Central Bank, despite the earlier expectation that rates would increase by one-half percentage point.
Credit Suisse's share price plunged to a new low partly due to the Swiss bank's "material weakness" in its financial reporting controls and to its largest shareholder, the Qatar Investment Authority, who balked at injecting more funds for regulatory reasons.
For weeks, the European Central Bank has been expected to follow through on its plans to raise interest rates by half a percentage point, but barometer changes indicated that industry stakeholders have started to speculate that the central bank may reduce its plans for higher rates this year.
It is said that Credit Suisse's collapse put a severe pressure on other banks in Europe and the United States, particularly regional ones that are held responsible for the high financial risks in stress-filled economies.
Overnight, Credit Suisse received a $54 billion rescue from the Swiss National Bank to salvage investor confidence in the bank, which has been viewed as a source of significant worry in the US and abroad.