Credit Suisse on Thursday announced plans to borrow as much as $54 billion from the Swiss National Bank after its stock tumbled Wednesday amid fears over the health of global banks.
Credit Suisse said it will also buy back about $3 billion worth of debt. In a statement posted on its website, CEO Ulrich Koerner thanked the Swiss National Bank and FINMA, Switzerland’s financial market supervisory authority.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” Koerner said. “My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
The announcement came after the Swiss National Bank and FINMA issued a joint statement Wednesday reiterating that Credit Suisse remained financially healthy.
Fears over the health of global banks began in the U.S. following the collapse last week of Silicon Valley Bank, according to The Wall Street Journal. Federal regulators took control of the bank on Friday after it announced that it had sold $21 billion worth of securities at a loss of $1.8 billion, prompting concerned customers to pull their funds.
A second financial institution, New York’s Signature Bank, also collapsed on Sunday, fueling market uncertainty.
On Wednesday, the Swiss National Bank and FINMA emphasized that “the problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets.”
“The strict capital and liquidity requirements applicable to Swiss financial institutions ensure their stability. Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks,” they said.
The bank’s stock plunged to a record-low Wednesday after the chairman of its top shareholder, Saudi National Bank, told Bloomberg TV that it would not raise its stake in the bank past the current level, just under 10%.
Asked if Saudi National Bank was open to boosting its investment, Chairman Ammar Al Khudairy said, “absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” according to Bloomberg News.
“If we go above 10%, all new rules kick in whether it be by our regulator or the Swiss regulator or the European regulator,” he said. “We’re not inclined to get into a new regulatory regime. I can cite five or six other reasons, but one reason is there is a glass ceiling and we’re not going to entertain going beyond it.”
Credit Suisse, which was founded in 1856 and serves as Switzerland’s second-largest lender, had already been grappling with issues including huge trading losses due to bad bets on hedge funds and a spying scandal centered on a former employee, The Associated Press reported. Its shares rose Thursday after the agreement between it and the Swiss National Bank was announced, according to the AP.
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