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Tuesday, March 28, 2023

The Swiss Central Bank bailed out Credit Suisse and announced liquidity injection

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The Swiss bank requested a loan of US$53.7 billion and announced a debt buyback for an additional US$3.325 million.

After the Swiss financial regulator FINMA and the country’s central bank confirmed a bailout for Credit Suisse, the entity announced early Thursday morning (European time) that it will borrow up to 50 billion Swiss francs, equivalent to US$53.7 billion.

At the same time, the Credit Suisse announced in a statement a series of debt repurchase operations for around 3,000 million Swiss francs, about US$3,235 million. “These steps are a decisive move to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our customers and other stakeholders.” Bank CEO Ulrich Koerner was quoted as saying in the statement.

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After these measures, Credit Suisse shares jump sharply this Thursday, March 16, at the start of operations in the Swiss market and also in the Wall Street premarket.

After an astonishing silence since the start of the week, the Swiss central bank and Switzerland’s financial supervisor finally came to CS’s defense on Wednesday. “Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks”assured the Swiss National Bank (SNB, central) and the Financial Market Supervisory Authority (Finma) in a joint statement.

“In case of need, the SNB will make liquidity available to Credit Suisse”added the institutions.

He Credit Suisse meltdown occurs after the bankruptcy of the Californian bank Silicon Valley Bank (SVB) by a wave of massive customer withdrawals that left the establishment struggling to fend for itself. “It seems that more and more investors are looking towards CS as the next most likely domino” to fall, said Neil Wilson, an analyst at Finalto.

But if Credit Suisse has to deal with “existential problems”, it is a different kind of difficulty for the banking sector, in his opinion. “It’s really too big to go bankrupt,” he said.

Source: Ambito

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