Photo Credit: Tony Webster
The Silicon Valley Bank branch in Tempe, Arizona, January 10, 2020.

US banking shares plummeted Wednesday at the opening of the stock exchange, with investor services downgrading the entire banking industry in response to the crisis.

JP Morgan Chase was down 3.6 percent, Citigroup was down by five percent and First Republic plunged by 18.7 percent.

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Wells Fargo declined by more than five percent, Bank of America dropped by more than four percent and Goldman Sachs fell nearly four percent as well.

First Republic Bank was downgraded by Standard & Poor’s (S&P) to “junk” status. The bank was also placed on review for potential downgraded credit rating by Moody’s Investors Service, along with five other banks – Zions Bancorp, Western Alliance, Comerica, UMB Financial and Intrust Financial.

However, CNBC’s ‘Halftime Report’ investment committee member Jim Lebenthal bought First Republic Bank on Tuesday, calling it a “good bank” that he said was “lubricating the economy.”

But the storm is not over: As of 9 am Wednesday, Comerica shares were down by more than nine percent, as were those of Zions Bancorp. Western Alliance was down by nearly seven percent; UMB Financial dropped by nearly five percent.

Moody’s has downgraded its outlook on the US banking system to “negative,” citing the “rapidly deteriorating operating environment.”

The crisis is not limited to the United States: European bank stocks are also taking a nosedive, with Zurich-based Credit Suisse chief among them.

The Swiss lender’s share fell by more than 25 percent on Wednesday, hitting a new record low. The bank’s top shareholder, Saudi National Bank, meanwhile ruled out the possibility of pouring any more money into the bank.

The crisis at Credit Suisse followed the bank’s admission to finding “material weaknesses” in its financial reporting over the past two years.

Chaos in the banking industry began this past weekend with the failure of Silicon Valley Bank, based in San Francisco with branches worldwide.

The bank’s branches in Canada, Israel and Britain were closed following the failure; however, in the UK, the international HSBC bank purchased the London-based branch for slightly more than one US dollar in a deal brokered by the Bank of England.

In Israel, the Netanyahu government pledged to help Israel-based startups who were caught in the maelstrom.

US federal regulators this past weekend also shut down and took over California-based Silvergate Capital Bank, which provided services for those using cryptocurrency.

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Hana Levi Julian is a Middle East news analyst with a degree in Mass Communication and Journalism from Southern Connecticut State University. A past columnist with The Jewish Press and senior editor at Arutz 7, Ms. Julian has written for Babble.com, Chabad.org and other media outlets, in addition to her years working in broadcast journalism.