Credit Suisse announced that it will borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank under a covered credit facility and a short-term liquidity facility.
The decision comes shortly after shares in the lender fell sharply On Wednesday, it hit an all-time low for a second day in a row after its biggest investor Saudi National Bank said it will not be able to provide further assistance.
The latest moves will “support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs,” the company said in a message.
In addition, the bank is making a cash tender offer in relation to ten US dollar-denominated senior notes for an aggregate purchase price of up to $2.5 billion – as well as a separate offer for four euro-denominated senior notes for up to an aggregate of €500 million, the company said.
“These actions demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” said Credit Suisse CEO Ulrich Koerner.
“We thank the SNB and FINMA as we carry out our strategic transformation. My team and I are determined to move forward quickly to deliver a simpler and more focused bank built around customer needs,” he said.
US futures climbed, with Dow Jones Industrial Average semesters increase by more than 100 points after the announcement. S&P 500 futures also rose 0.45% and Nasdaq 100 futures climbed 0.54%.
“connected” banks
In the wake of the Credit Suisse saga, Tabbush Report founder Daniel Tabbush emphasized that a broader concern for the banking sector is trust.
“The obvious problem is to restore confidence and to stop deposit flight, which may have been partially or fully addressed by the central bank,” he told CNBC’s “Street Signs Asia.”
Credit Suisse timeline
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“But what’s more difficult is not just containing their problems, it’s really how this plays through to so many interconnected banks, where there are Credit Swiss contracts – where there are derivatives, where there are facilities – which is really the next order issue , ” he said.
Asia-Pacific banks also pared some earlier losses – Japan’s Topix earlier fell more than 2% and last traded 1.4% lower.
Credit Suisse announced late Wednesday that it will borrow up to about $54 billion from the Swiss central bank. People walk past the Credit Suisse headquarters in New York on March 15, 2023 in New York City.
Spencer Platt | Getty Images News | Getty Images
The Commonwealth Bank of Australia pared most of its losses in volatile trade – it was trading 0.15% lower after falling as much as 1.97% earlier. Westpac Banking and National Australia Bank fell as much as 2.35% and 1.81%, respectively, before some declines were erased. They were last down 1.34% and 0.58% lower respectively.
Some South Korean banks also fell as much as 2% earlier before partially reversing declines.
The Swiss francs remained volatile after the announcement, strengthening 0.17% to 0.9315 against the US dollar. The Japanese yen also strengthened further to 132.86 against the dollar.
Earlier this week, Credit Suisse chairman Axel Lehmann told CNBC’s Hadley Gamble that the recent collapse of Silicon Valley Bank is “local and contained.”
Asked if he would rule out any form of government support in the future, Lehmann said: “We are regulated, we have strong capital ratios, very strong balance sheet. We are all hands on deck. So that is not the subject at all.”
— CNBC’s Lim Hui Jie contributed to this report.
