Credit Suisse shares soar over 20% on Swiss National Bank loan announcement

Credit Suisse shares soar over 20% on Swiss National Bank loan announcement

A branch of the Swiss banking giant Credit Suisse behind a window in the rain in Basel. (Photo by FABRICE COFFRINI/AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

Fabrice Coffrini | AFP | Getty Images

Credit Suisse shares rose over 30% at market open on Thursday after the bank announced it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

The stock’s rally cooled slightly in early trading, but shares were still up 21.8% as of 10am London time.

The embattled lender announced late Wednesday that it would exercise its option to borrow from the Swiss central bank under a secured credit facility and a short-term liquidity facility.

The Swiss National Bank and the Swiss Financial Market Supervisory Authority announced on Wednesday that Credit Suisse “meets the capital and liquidity requirements for systemically important banks”.

The bank also offered to repurchase approximately 3 billion Swiss francs of debt relating to 10 US dollar-denominated senior debt and four euro-denominated senior debt.

“These actions demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” said Ulrich Koerner, CEO of Credit Suisse, in Wednesday’s statement.

“We thank him [Swiss National Bank] and FINMA in the implementation of our strategic transformation. My team and I are committed to moving fast to deliver a simpler and more focused bank, aligned with clients’ needs.”

Credit Suisse shares, along with many other European banks, began slipping earlier in the week on contagion fears over the collapse of Silicon Valley Bank.

The Swiss bank’s losses deepened on Tuesday after it revealed in its belated annual report that it had identified “material weaknesses” in its financial reporting in 2021 and 2022, although this did not affect the accuracy of the bank’s financial statements.

Credit Suisse shares plunged to a new all-time low for the second straight day on Wednesday after the Saudi National Bank – a top investor – announced it would stop pumping money due to regulatory restrictions.

The National Bank of Saudi Arabia took a 9.9% stake in Credit Suisse as part of the lender’s $4.2 billion capital raise to fund a massive strategic overhaul aimed at improving investment banking performance and fix a litany of risks and compliance failures.