Credit Suisse on Thursday said it plans to borrow up to $54 billion from Switzerland’s central bank to bolster its liquidity after shares in the lender fell to new lows.
The bank will also access a “short-term liquidity facility” and repurchase about $3 billion in debt, according to a statement published on its website.
Credit Suisse, a 166-year-old institution, was fighting for its life on Wednesday. Its shares on the SIX Swiss Exchange fell 24 percent to hit a new low, and its bond prices also fell sharply. The cost of financial contracts, which protect against a bank default, rose to its highest level ever.
After European markets closed on Wednesday, the Swiss National Bank and Finma, the country’s financial regulator, issued a joint statement certifying Credit Suisse’s financial health and saying the central bank would support the bank if needed. Hours later, Credit Suisse said it plans to borrow 50 billion Swiss francs from the Swiss National Bank.
The immediate trigger for a dangerous fall in the bank’s share price was a comment from Ammar al-Khudairy, the governor of the National Bank of Saudi Arabia, the bank’s largest shareholder. In a television interview with Bloomberg News, Mr al-Khudairy said the state-owned bank would not be putting any more money into Credit Suisse.
Credit Suisse has been plagued by years of mistakes and controversies that have cost it two CEOs over three years. These include huge trading losses related to the implosion of investment firm Archegos and lender Greensill Capital; It also includes a number of scandals, from involvement in money laundering to spying on former employees.
The company has embarked on a sweeping turnaround plan that includes thousands of layoffs and the spin-off of its Wall Street investment bank. But investors have wondered if persistent losses and customer attrition — the company lost about $147 billion worth of customer deposits in the last three months of 2022 — have threatened those efforts.
This is an evolving story.
