March 16, 2023 0:26 AM
ZURICH — Credit Suisse announced Thursday that it would borrow almost $54 billion from the Swiss central bank to reinforce the group after a plunge in its share prices.
The disclosure came just hours after the Swiss National Bank said capital and liquidity levels at the lender were adequate for a “systemically important bank,” even as it pledged to make liquidity available if needed.
In a statement, Credit Suisse said the central bank loan of up to $53.7 billion would “support… core businesses and clients,” adding it was also making buyback offers on about $3 billion worth of debt.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” CEO Ulrich Koerner said in the statement.
“My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
Credit Suisse, hit by a series of scandals in recent years, saw its stock price tumble off a cliff Wednesday after major shareholder Saudi National Bank declined to invest more in the group, citing regulatory constraints.
Its shares fell more than 30% to a record low before regaining ground to end the day 24.24% down, at 1.697 Swiss francs.
Credit Suisse’s market value had already taken a heavy blow this week over fears of contagion from the collapse of two U.S. banks, as well as its annual report citing “material weaknesses” in internal controls.
Mounting concerns
Analysts have warned of mounting concerns over the bank’s viability and the impact on the larger banking sector, as shares of other lenders sank Wednesday after a rebound the day before.
Credit Suisse is one of 30 banks globally deemed too big to fail, forcing it to set aside more cash to weather a crisis.
Neil Wilson, chief market analyst at trading firm Finalto, said Wednesday that if the bank did “run into serious existential trouble, we are in a whole other world of pain.”
In February 2021, Credit Suisse shares were worth 12.78 Swiss francs, but since then, the bank has endured a barrage of problems that have eaten away at its market value.
It was hit by the implosion of U.S. fund Archegos, which cost it more than $5 billion.
Its asset management branch was rocked by the bankruptcy of British financial firm Greensill, in which some $10 billion had been committed through four funds.
The bank booked a net loss of nearly $8 billion for the 2022 financial year.
That came against a backdrop of massive withdrawals of funds by its clients, including in the wealth management sector — one of the activities on which the bank intends to refocus as part of a major restructuring plan.