- 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.
- On Thursday morning, the CS share starts pre-market up 21 percent.
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.
Investors react with relief to the help. Shares of the big bank were indexed 21 percent higher in premarket trading on Thursday. On Wednesday, the price temporarily fell to a record low of 1.55 francs and closed 24 percent weaker at 1.70 francs.
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 bank’s shares had previously fallen by up to 30 percent on Wednesday. The dramatic fall in the price of Credit Suisse had triggered concerns around the world and plunged the financial markets into turbulence.