Credit Suisse to borrow up to 50 bln Swiss francs from Swiss National Bank
Credit Suisse on Thursday said it was taking "decisive action" to strengthen its liquidity by borrowing up to $54 billion from the Swiss central bank after a slump in its shares intensified fears about a broader bank deposit crisis.
The Swiss bank's problems have shifted the focus for investors and regulators from the United States to Europe, where Credit Suisse led a selloff in bank shares after its largest investor said it could not provide more financial assistance because of regulatory constraints.
Regulators in the private banking hub on Wednesday had sought to ease investor fears around Credit Suisse, which added to broader worries sparked by last week's collapse of Silicon Valley Bank and Signature Bank, two US mid-size firms.
Asian stocks had extended Wall Street's tumble on Thursday and investors bought gold, bonds and the dollar, leaving markets on edge ahead of a European Central Bank meeting later in the day. The bank's announcement in the early European morning helped trim some of those losses through trade was volatile.
Credit Suisse shares slumped by as much as 30% on Wednesday after its largest shareholder said it could not provide further support, prompting the Swiss bank's CEO to make new assurances on its financial strength.
Saudi National Bank (SNB) (1180. SE), which holds 9.88% of Credit Suisse (CSGN.S), said it would not buy more shares on regulatory grounds.
Shares in Credit Suisse, which is battling to recover from a string of scandals that have undermined the confidence of investors and clients, closed the day down about 14%, after shedding as much as 30% to a new record low.
Joy Yang, head of global product management and marketing at Market Vector Indexes, said the pressure on Credit Suisse reflected longstanding questions about the bank's management, compounded by investors' renewed focus on banking shares after last week's collapse of Silicon Valley Bank.
"They're searching for weakness across all banks including Credit Suisse," Yang said. "So the risk is not off the table. And across the horizon, people are trying to think about well, you know, what does this really mean for the banking industry as a whole, you know, where does this take bank insurance? Where does it take investor costs, you know, so all of these create more risk and fragility across the banking sector."
Credit Suisse CEO Ulrich Koerner moved to calm nerves, saying the bank's liquidity base remained strong and was well above all regulatory requirements. Koerner had said earlier in the week Credit Suisse's liquidity coverage ratio averaged 150% in the first quarter of this year.
Greg Swenson, the founding partner at Brigg Macadam in London, said Credit Suisse faced a "perfect storm" after last week's collapse of Silicon Valley Bank, coupled with pre-existing problems at the European bank.
Reuters
