Credit Suisse announced it would borrow up to 50 billion Swiss francs from the Swiss National Bank in a move to strengthen its liquidity amid dwindling stock prices.
Fifty billion Swiss francs is the equivalent of $53.68 billion. Credit Suisse is the country’s second biggest lender.
On Wednesday, Credit Suisse’s shares went down as much as 30 percent as fears from Silicon Valley Bank and Signature Bank’s failures reached across the Atlantic Ocean.
Earlier on Wednesday, the Swiss National Bank announced it would provide Credit Suisse with liquidity if necessary.
In exercising that option hours later, Credit Suisse said it is “taking decisive action to pre-emptively strengthen its liquidity.”
“This additional liquidity would 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,” a press release stated.
Credit Suisse CEO Ulrich Koerner said:
These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders. We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.
The Swiss lender also announced it would “buy back some debt securities in a bid to reduce interest expense and take advantage of the depressed prices of many of its bonds,” the Wall Street Journal reported.
As the press release stated:
Credit Suisse also announces today that it is making a cash tender offer in relation to ten US dollar denominated senior debt securities for an aggregate consideration of up to USD 2.5 billion.
Concurrently, Credit Suisse is also announcing a separate cash tender offer in relation to four Euro denominated senior debt securities for an aggregate consideration of up to EUR 500 million.
In an earlier joint statement from the Swiss National Bank and Credit Suisse, they calmed fears that the lender would suffer the same fate as Silicon Valley Bank or Signature Bank.
The Swiss authorities said the problems of “certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets.”
“There are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market,” the statement added.