Thu, Mar 16th 2023
The Swiss National Bank (SNB) has offered to loan flailing Credit Suisse up to 50 billion Swiss francs to prevent systemic contagion in the wake of Silicon Valley Bank’s collapse.
On Tuesday, Credit Suisse released its annual report which revealed that the bank experienced a full-year net loss of CHF7.3 billion.
The news came after months of scandals, plummeting stock prices and bad headlines. Credit Suisse clients have left the bank in droves – taking about 110 billion Swiss francs with them in the fourth quarter alone. CEO Ulrich Körner said in January at the World Economic Forum in Davos that the bank was seeing cash “coming back in different parts of the firm,” but the bank confirmed Tuesday that the outflow had stabilized, but “not yet reversed.”
On Wednesday, major Credit Suisse shareholder Saudi National Bank announced it would “absolutely not” not lend a hand to the struggling bank. Saudi owns a 10% stake in the bank.
By Wednesday evening, Credit Suisse stocks were down 39% this year. The plummet caused U.S. and European bank stocks – already fragile from the Silicon Valley Bank implosion – to drop further.
Overnight, the Swiss National Bank disclosed that it would make provide a loan to Credit Suisse, as well as buying back CHF3 billion of Credit Suisse’s debt to shore up its liquidity.
On Thursday, Credit Suisse announced it would like “to pre-emptively strengthen its liquidity” by borrowing the funds from SNB under a short-term liquidity facility.
SNB will make a cash tender offer for 10 U.S. dollar-denominated senior debt securities that are worth up to $2.5 billion. In addition, it will make an offer for four euro-denominated senior debt securities worth up to €500 million. SNB says Credit Suisse has until next Wednesday to make a decision or the offers expire.
The offers “demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation,” Körner said to the Financial Times.
“My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs,” Körner added.
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