Help for Credit Suisse – CS shares have recovered strongly – SNB supports with 50 billion – news

  • In order to strengthen its liquidity, Credit Suisse (CS) wants to borrow up to CHF 50 billion from the Swiss National Bank (SNB).
  • This would make CS the first globally systemically important bank to receive tailor-made help since the financial crisis.
  • CS shares started trading on Thursday morning at CHF 2.25 (+32.59 percent).
  • The stock is currently up 24.1 percent, while the SMI index is also recovering.

On Wednesday, the bank management had emphasized that CS was liquid. However, there were already reports in the British press that the bank had asked the SNB for help. After the market closed, the SNB agreed to provide this support if necessary. This case of need apparently occurred shortly after midnight.

ECB discusses rate hike amid turbulence


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The currency watchdogs of the (ECB) are discussing another rate hike in the fight against high inflation on Thursday in the midst of a phase of severe financial market turbulence that lasted for days. According to experts, the upheavals on the stock exchanges could dissuade them from their prospect of a sharp rise in interest rates. Until last week, it was taken for granted that the ECB would tighten interest rates again by 0.50 percentage points. But the collapse of the Silicon Valley Bank (SVB) in the USA had triggered shockwaves on the stock markets worldwide and concerns about the stability of the banking sector.

Investors react with relief to the help from the SNB. Even before trading begins, CS shares gain over 30 percent pre-market. On Wednesday, the price temporarily fell to a record low of 1.55 francs and closed 24 percent weaker at 1.70 francs.

The CS share then started the trading day on Thursday at 9 a.m. at CHF 2.25. Traders are talking about a relief rally.

CS speaks of “preventive strengthening” of liquidity

“With these measures, we are strengthening Credit Suisse on the path to strategic transformation in order to create added value for our clients and other stakeholders,” CS boss Ulrich Körner is quoted as saying in the statement. “We thank the SNB and Finma.”

Borrowing from the SNB is fully secured by first-class assets. In addition, the bank is making offers for up to three billion Swiss francs of senior debt for cash.

Credit Suisse announced on Thursday night that the use of SNB loans as part of a secured loan and short-term liquidity loans serves to “preventively strengthen” liquidity. This supports the core business of CS and the customers of the big bank.

The step came after the SNB and the financial market regulator Finma of Credit Suisse announced that they would provide liquidity if required. The dramatic fall in the price of Credit Suisse had triggered concerns around the world and plunged the financial markets into turbulence.

Price decline after announcement by major shareholder


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The sharp fall in the share price began after the president of Saudi National Bank, Credit Suisse’s largest shareholder, said he ruled out any further injection of funds into the group, mainly for regulatory reasons.

Founded in 1856, Credit Suisse, one of the 30 global banks classified as too big to fail, has struggled since the bankruptcy of UK finance company Greensill, which marked the start of a series of scandals. Since March 2021, the stock has lost more than 83 percent of its value. Bank investors are also particularly worried after the bankruptcy of the Silicon Valley Bank (SVB).

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