Credit Suisse to borrow nearly R1 trillion from Swiss central bank

March 16, 2023

Credit Suisse announced Thursday that it would borrow almost US$54 billion (R996 billion) from the Swiss central bank to reinforce the group after a plunge in its share prices. 

The disclosure came just hours after the Swiss National Bank said capital and liquidity levels at the lender were adequate for a "systemically important bank", even as it pledged to make liquidity available if needed.

In a statement, Credit Suisse said the central bank loan of up to 50 billion francs (US$53.7 billion) would "support... core businesses and clients", adding it was also making buyback offers on about US$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 in the statement.

"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 stock price tumble off a cliff Wednesday after major shareholder Saudi National Bank declined to invest more in the group, citing regulatory constraints.

Its shares fell more than 30 percent to a record low before regaining ground to end the day 24.24 percent down, at 1.697 Swiss francs.

Credit Suisse's market value had already taken a heavy blow this week over fears of contagion from the collapse of two US banks, as well as its annual report citing "material weaknesses" in internal controls.

Analysts have warned of mounting concerns over the bank's viability and the impact on the larger banking sector, as shares of other lenders sank on Wednesday after a rebound the day before.

Credit Suisse is one of 30 banks globally deemed too big to fail, forcing it to set aside more cash to weather a crisis.

Neil Wilson, chief market analyst at trading firm Finalto, said Wednesday that if the bank did "run into serious existential trouble, we are in a whole other world of pain".

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Last modified on Thursday, 16 March 2023 14:27

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