Bank borrows billions: Switzerland grants Credit Suisse a strong cash injection


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Bank borrows billions

Switzerland grants Credit Suisse a substantial cash injection

The collapse of several small US banks is also causing uncertainty in Europe. Credit Suisse in particular is coming into focus. The institute is now borrowing billions of francs from the Swiss central bank.

Struggling with a deep crisis of confidence, Credit Suisse is exercising its option to borrow up to 50 billion Swiss francs, around 54 billion dollars, from the Swiss National Bank (SNS) in order to strengthen its liquidity. The company announced this during the night. In addition, the bank is making offers for up to three billion Swiss francs of senior debt for cash. “With these measures, we are strengthening Credit Suisse as part of our strategic change in order to create added value for our clients and other stakeholders,” said bank boss Ulrich Körner.

CreditSuisse 1.70

The move came after Swiss regulators pledged liquidity support to Credit Suisse after shares of the Swiss flagship plummeted on Wednesday. Credit Suisse is the first global, systemically important bank since the financial crisis to receive a tailor-made lifeline.

“It’s more restless around us”

The collapse of several regional US banks recently triggered uncertainty in the banking sector. This was particularly evident at Credit Suisse, which was already suffering. The bank’s shares fell in Zurich by more than 30 percent at times to a record low of 1.56 francs (1.59 euros) and closed at the end of trading with a decline of more than 24 percent. In an interview with Bloomberg TV, the chairman of the Saudi National Bank, Ammar Abdul Wahed Al Khudairy, categorically ruled out additional support on request. The bank is a major shareholder in Credit Suisse, which last year reported a loss of 7.3 billion Swiss francs and massive withdrawals from client assets of 123 billion.

Credit Suisse’s Swiss business, which he manages, is well positioned and working well, said André Helfenstein, head of Credit Suisse Switzerland, in an interview with the Swiss broadcaster Blick TV. The bank wants to be close to the customers and also consistently continue the restructuring of the bank. Credit Suisse will be a different bank in two years than it is today, it will be more stable and concentrate on Switzerland and the wealth management business. However, because of the restructuring and the “challenging financial year 2022”, the big bank is in sight with a loss in the billions, said Helfenstein. “It’s more restless around us.”

“If a bank coughs, everyone gets hit”

The uncertainty also pushed other bank stocks into the red on Wednesday. The industry index Stoxx Europe 600 Banks fell by 6.9 percent. In Germany, Commerzbank shares slipped by 8.7 percent, Deutsche Bank papers lost 9.3 percent at the end of the Dax. “If a bank coughs, everyone gets hit,” commented analyst Salah-Eddine Bouhmidi from broker IG. The Dax stock index closed 3.27 percent lower at 14,735.26 points and thus fell below the round mark of 15,000 points.

With regard to the uncertainty in the banking sector, Federal Finance Minister Christian Lindner emphasized the stability of the German credit system. “The federal government is in constant and intensive exchange with everyone involved,” said the FDP chairman in the evening on the ARD program “Maischberger”. “With the Bafin, we have an efficient financial supervisory authority, and we have the Bundesbank, which also has a tradition of political stability. We can therefore say very clearly: the German credit system – private banks, savings banks, cooperative institutions – is stable. And we also ensure that further.”

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