Key points:
Under a covered loan facility and a short-term liquidity facility, Credit Suisse will borrow up to 53.68 billion Swiss francs from the Swiss National Bank.
After the lender’s top investor, Saudi National Bank, stated that it would not be able to provide any additional assistance, the measures come after the lender’s shares experienced sharp declines on Wednesday.
Under a covered loan facility and a short-term liquidity facility, Credit Suisse will borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank.
The lender’s shares plunged sharply on Wednesday, hitting a record low for the second day in a row, shortly after its top investor, Saudi National Bank, was quoted as saying it would not be able to offer any additional assistance.
According to an announcement, the most recent actions will “support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.”
According to the company, the bank is also making a cash tender offer for ten senior debt securities denominated in U.S. dollars for a total consideration of up to $2.5 billion and a separate offer for four senior debt securities denominated in Euros for a total consideration of up to 500 million euros.
Ulrich Koerner, CEO of Credit Suisse, stated, “These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.”
He mentioned the Swiss Financial Market Supervisory Authority and said, “We thank the SNB and FINMA as we execute our strategic transformation.”
“My team and I are determined to move quickly to deliver a bank that is simpler and more focused on client needs.”
After the announcement, U.S. futures rose, with the Dow Jones Industrial Average futures rising by more than 100 points. Additionally, futures on the S&P 500 and Nasdaq 100 both gained 0.54 percent.
Table of Contents
“A small amount of panic”
Saudi National Bank told CNBC that Wednesday’s panic was unwarranted and that Credit Suisse had not asked for financial assistance.
Ammar Al Khudairy, chairman of Saudi National Bank, Credit Suisse’s largest shareholder, stated, “There has been no discussion with Credit Suisse about providing assistance.”
He stated to Hadley Gamble of CNBC, “I don’t know where the word ‘assistance’ came from, there have been no discussions whatsoever since October.”
He went on to say that the most recent upheaval in the banking market is “isolated” and the result of “a little bit of panic.”
He stated on CNBC’s “Capital Connection” that “if you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses… it’s panic, a little bit of panic.”
He stated, “But what is more difficult is not simply containing its issues, but actually how this feeds through to so many interconnected banks, where there are Credit Swiss contracts – where there are derivatives – where there are facilities – which is really the next order issue.” He added, “But what is more difficult is not simply containing its issues.”
Banks in the Asia-Pacific region also reduced some of their previous losses. Japan’s Topix initially fell by more than 2% and is currently trading 1.4% lower.
The Republic Bank of Australia
pared the vast majority of its misfortunes in unpredictable exchanging – it exchanged 0.15% lower in the wake of falling as much as 1.97% prior. Before erasing some of their losses, Westpac Banking and National Australia Bank plunged as much as 2.35 percent and 1.81 percent, respectively. In the end, they were down 1.34 percent and 0.58%, respectively.
Before partially reversing their declines, some South Korean banks also experienced earlier declines of up to 2%.
Following the announcement, the Swiss franc strengthened 0.17% to 0.9315 against the US dollar, remaining volatile. The Japanese yen also gained more ground against the US dollar, reaching 132.86.
