Just as Lehmann was speaking in Riyadh Wednesday, Credit Suisse shares were in the process of sinking to a record low before trading was halted. The rout occurred after the bank’s largest remaining shareholder, the Saudi National Bank, announced Wednesday it would not be increasing its 9.88% stake in the company, citing regulatory hurdles. “We cannot because we would go above 10%. It’s a regulatory issue,” SNB chairman Ammar Al Khudairy told Reuters Wednesday.

The market was not persuaded by Al Khudairy’s reasoning, with a selloff so ferocious that Credit Suisse lost nearly the value of an entire Goldman Sachs and at one point ranked as the world’s 155th-largest bank, as noted by the Financial Times’ Alphaville blog. Meanwhile, traders piled into credit default swaps, indicating the market expects the bank to default on its debt.

It’s the latest in a string of setbacks and even controversies for the Swiss bank, where shares have been hit harder than most by SVB’s collapse, something Lehmann hinted at in Riyadh. 

“It’s a warning signal, now we are all coming out of many many years of abundant money supply,” he said.

It is still unclear how far the damage of SVB’s failure could ripple out. In addition to the European bank stock rout, Signature, a tech- and crypto-focused bank, was seized by federal regulators on Sunday. SVB’s collapse has also raised concerns that the Federal Reserve’s interest rate hikes may be doing more damage to the economy than first presumed, and Fed officials may have to rethink the scope of their tightening campaign at their meeting next week, with potentially big ramifications for inflation’s trajectory in the U.S.

But the impact of SVB’s collapse would be relatively minor compared with the fallout of a Credit Suisse implosion, which could have big impacts on the global economy. A banking crisis resulting from SVB’s collapse seemed to have been momentarily averted last weekend when the government stepped in with extraordinary measures, and no further bank runs materialized through Wednesday, but a Credit Suisse default is another matter. 

“The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks,” BlackRock CEO Larry Fink wrote in a letter to investors Wednesday of SVB’s cleanup, but he warned that fears persist on more banks failing. “Markets remain on edge. Will asset-liability mismatches be the second domino to fall?”

“Credit Suisse is in principle a much bigger concern for the global economy than the regional U.S. banks which were in the firing line last week,” Capital Economics analysts led by Andrew Kenningham wrote in a note to clients Wednesday, referring to the bank’s large balance sheet and worldwide presence. “Credit Suisse is not just a Swiss problem but a global one.”

Banking problems pile up

While SVB collapsed in the space of two days, issues with Credit Suisse have been well known to the public for years after a series of mishaps. A corporate spying affair involving executives; a $5.5 billion loss in failed hedge fund Archegos; links to money-laundering for a Bulgarian drug-smuggling crime group; and reports of shredding evidence linking the bank to loans for sanctioned Russian oligarchs are just a few of the scandals that have plagued Credit Suisse in recent years.

Investors are starting to get fed up with the Zurich-based bank, and Harris Associates, a U.S. investment firm and historically Credit Suisse’s largest backer, cut ties with the bank last week, the firm’s chief investment officer David Herro announced.

“There is a question about the future of the franchise,” he told the Financial Times of his firm’s falling confidence in the bank.

On Wednesday, after trading was halted, Credit Suisse appealed to the Swiss National Bank to make a public show of support and reassure investors. The European Central Bank has so far declined to comment publicly on Credit Suisse’s standing. Speaking in Riyadh, Lehmann declined to comment on whether the bank is in need of government assistance.

Capital Economics analysts wrote that Credit Suisse’s problems “do not come as a complete shock” to either investors or government officials. In the event Credit Suisse does fail, having an “orderly resolution plan” to repay clients and manage the bank’s wind-down would be critical to ensuring contagion doesn’t spread to the rest of the financial system, they added.

“Experience suggests that a quick resolution can be achieved without triggering too much contagion provided that authorities act decisively and senior debtors are protected. While regulators will be aware of this, the risk of a botched resolution will be worrying the markets until a solution becomes apparent,” they wrote.

The bigger question is whether a Credit Suisse collapse combined with the troubles in U.S. banking represents isolated incidents or a wider crisis within the banking sector, although Credit Suisse’s long history of scandals and investors backing out may not be a systemic issue.

But Credit Suisse’s troubles are shared to a lesser extent by other European banks, which have been struggling with profitability for years, Capital Economics noted. The ripple effects could hit U.S. banks too, JPMorgan Asset Management CIO Bob Michele told Bloomberg Wednesday, saying Credit Suisse’s issues were just the “tip of the iceberg,” and “there is a lot more pain yet to come.”