Credit Suisse announced that it would borrow up to $53.7 billion from Switzerland’s central bank to support its operations. This announcement comes on Thursday as market repercussions from Silicon Valley Bank’s collapse worsen. And as international authorities work to prevent a repetition of the 2008 financial crisis. Compared to SVB and Signature Bank of New York, the troubled Swiss bank is significantly bigger and more integrated into the world banking system.
Asian equities sold off, with Hong Kong’s Hang Seng Index and Japan’s bank-heavy Topix down 1.55 and 1.29 percent. Investors flocked to safe-haven assets such as gold and government bonds. The Credit Suisse announcement helped limit a possible rout.
In a statement, the bank said it was also making buyback offers on about $3 billion worth of debt.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” CEO Ulrich Koerner said
“My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
Credit Suisse, hit by a series of scandals in recent years, saw its share price tumble off a cliff Wednesday. After the Saudi National Bank declined to inject more money into the group.
Its shares fell more than 30 percent before regaining some ground to end the day’s trading down 24.24 percent at 1.697 Swiss francs.
In February 2021, Credit Suisse shares were worth 12.78 Swiss francs. But since then, the bank has endured a barrage of problems that have eaten away at its market value.
Wednesday’s plunge also came amid fears of contagion brought on by the failure of the US-based Silicon Valley Bank.
Credit Suisse is one of 30 banks globally deemed too big to fail, forcing it to set aside more cash to weather a crisis.