Credit Suisse Reaches Out to Swiss National Bank for $54 Billion in Aid
By In an effort to quell the panic that has spread throughout the international financial landscape, Credit Suisse Group AG has requested up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank and proposed to buy back its own debt. The Swiss National Bank (SNB) and the Swiss Financial Market Supervisory Authority (FINMA) issued a joint statement Wednesday afternoon confirming the measures taken by Credit Suisse to strengthen its liquidity position and ensure its financial stability.[0]
“The strict capital and liquidity requirements applicable to Swiss financial institutions ensure their stability,” the statement said. “Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide CS with liquidity.”
The statement came after Credit Suisse’s shares plummeted by 30 percent Wednesday morning, reigniting fears triggered last week by the failure of Silicon Valley Bank that the global financial system could be on the verge of a broader meltdown.[0] The sudden drop caused a stir in European markets, with other large banks on the continent witnessing their stock prices plummet.[1]
Following the announcement by the chairman of the Saudi National Bank (which holds a 10 percent stake in Credit Suisse) that no additional financial support would be provided, Credit Suisse shares experienced a dramatic decline.[1] It is thought by certain analysts that the latest banking crisis has been caused by increasing interest rates.[1]
Credit Suisse CEO Ulrich Koerner said in a statement that the measures taken demonstrate “decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.”[2] In addition to borrowing up to 50 billion Swiss francs from the Swiss National Bank, Credit Suisse also opened a cash tender offer in relation to ten U.S. dollar denominated senior debt securities for an aggregate consideration of up to $2.5 billion, as well as a separate offer to four Euro denominated senior debt securities for up to an aggregate 500 million euros.
He firmly denied the possibility of government assistance in the future, stating: “That’s not a topic. … We are regulated. We have strong capital ratios, very strong balance sheet. We are all hands on deck, so that’s not a topic whatsoever.”[3]
In order to become profitable once again, Credit Suisse is presently undergoing a major restructuring.[4]
0. “Credit Suisse slump renews fears of global banking crisis” Al Jazeera English, 15 Mar. 2023, https://www.aljazeera.com/economy/2023/3/15/credit-suisse-slump-renews-fears-for-global-banking-crisis
1. “Credit Suisse Teeters as Shares Slide 30 Percent” The Daily Beast, 15 Mar. 2023, https://www.thedailybeast.com/credit-suisse-teeters-as-shares-slide-28-percent
2. “Credit Suisse to borrow up to $54 billion from Switzerland's central bank” Axios, 16 Mar. 2023, https://www.axios.com/2023/03/16/credit-suisse-borrow-54-billion-switzerlands-central-bank
3. “Credit Suisse to borrow up to nearly $54 billion from Swiss National Bank” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/credit-suisse-to-borrow-up-to-about-54-billion-from-swiss-national-bank.html
4. “Swiss National Bank to give Credit Suisse financial support ‘if necessary'” The Washington Post, 15 Mar. 2023, https://www.washingtonpost.com/business/2023/03/15/svb-banking-credit-suisse-stocks/
