A Credit Suisse Group AG office building at night in Bern, Switzerland, Wednesday, March 15, 2023.

Stefan Wermuth | Bloomberg | Getty Images

Credit Suisse shares fell around 5% in early trading Friday, after soaring over the previous session as the strained lender said it will borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

Shares were trading 4.6% lower at 10:18 London time.

This week’s intervention by Swiss authorities, which also confirmed that Credit Suisse met the capital and liquidity requirements imposed on “systemically important banks”, sent shares jumping more than 18% on Thursday after closing at its lowest level on Wednesday. Credit Suisse also offered to buy back about 3 billion francs worth of debt related to 10 US dollar-denominated senior notes and four euro-denominated senior notes.

The decline to Wednesday’s low came after the top investor Saudi National Bank disclosed it would not provide the bank with any more cash due to regulatory requirements, exacerbating a downward spiral in Credit Suisse’s share price that began with the delay of its annual results over financial reporting issues.

The bank is undergoing a massive strategic review aimed at restoring stability and profitability after a litany of losses and scandals. The restructuring involves the spin-off of the investment bank to form US-based CS First Boston, a sharp reduction in exposure to risk-weighted assets and a $4.2bn capital raising partly funded by the 9.9% stake acquired by Saudi National. Bank.

But capital markets and stakeholders seem unconvinced. The share price has fallen sharply over the past year and Credit Suisse has seen huge outflows of assets under management, losing around 38% of its deposits in the fourth quarter of 2022. Credit default swapswhich insures bondholders against a company going bankrupt, rose to new record highs this week.

Switzerland's second largest bank is trying to get back on track after a series of scandals and losses.

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According to the CDS rate, bank default risk has risen to crisis levels, with the 1-year CDS rate jumping nearly 33 percentage points to 38.4% on Wednesday, before ending Thursday at 34.2%.

Charles-Henry Monchau, chief investment officer at Syz Bank, said Credit Suisse must go further to restore investor confidence.

“This support from the SNB and the statement from the supervisory authorities indicate that Credit Suisse in its current form will continue,” he said in a statement on Thursday.

“However, these measures are not enough to get Credit Suisse completely out of trouble, it is about restoring market confidence through the complete exit of the investment bank, a full guarantee of all deposits from the SNB and an injection of equity capital to give Credit Suisse time to restructure.”