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Credit Suisse has said it will take “decisive steps” to bolster its liquidity. The Swiss Central Bank agreed to lend it up to $54 billion after falling shares intensified fears of contagion in the financial sector.
The Swiss National Bank will lend up to 50 billion Swiss francs to Credit Suisse (54,000 million dollars) to calm the fears of its investors after the Saudi National Bank ruled out new investments in the entity, spreading panic in the financial sector.
The Swiss bank’s woes have gripped the spotlight of investors and regulators from the United States to Europe, where Credit Suisse led a sell-off in bank shares after its biggest investor ruled out more financial aid due to regulatory restrictions.
Regulators at the center of private banking have been desperately seeking to ease investor fears about Credit Suisse, which have added to concerns after the collapse last week of Silicon Valley Bank and Signature Bank, two midsize US banks.
During the trading day, investors bought gold, bonds and dollars, leaving markets on edge ahead of the European Central Bank meeting later that day. The bank’s announcement helped trim some of those losses, though trading was volatile.
Credit Suisse confirmed that it was exercising its option to borrow up to $54 billion from the Swiss National Bank. Investor attention now turns to actions by Asian central banks and other regulators to restore confidence in the banking system, as well as companies’ exposure to Credit Suisse.
Swiss financial regulator Finma and the country’s central bank said the bank “meets the capital and liquidity requirements imposed on systemically important banks,” giving the green light to access central bank liquidity if necessary.
Credit Suisse welcomed the statement of support from the Swiss National Bank and Finma.
This would make Credit Suisse the first major global bank to be granted such a lifeline since the 2008 financial crisis, even though central banks have provided liquidity more generally in times of market stress. For example, during the coronavirus pandemic.
The failure of Silicon Valley Bank last week, followed by that of Signature Bank two days later, sent global bank stocks through blistering days this week, with investors discounting reassurances from US President Joe Biden, and emergency measures in that country.
with Reuters
