Credit Suisse to borrow up to $54b from Swiss central bank

Credit Suisse to borrow up to $54b from Swiss central bank

Troubled banking giant Credit Suisse said it will borrow up to $54b from the Swiss central bank to shore up its finances.

The lender said it was taking decisive action to strengthen its liquidity as it looked to become a simpler bank.

Shares in Credit Suisse fell 24% on Wednesday after it said it had found "weakness" in its financial reporting.

This prompted a general sell off on European markets, and fears of a wider financial crisis.

Credit Suisse said its borrowing measures demonstrated "decisive action to strengthen [the bank]".

"My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs," Credit Suisse's chief executive Ulrich Koerner said in a statement.

Problems in the banking sector surfaced in the US last week with the collapse of Silicon Valley Bank, the country's 16th-largest bank, followed two days later by the collapse of Signature Bank.

After Credit Suisse shares plunged on Wednesday, a major investor - the Saudi National Bank - said it would not inject further funds into the Swiss lender.

The worries spread across financial markets with all major indexes falling sharply.

"The problems in Credit Suisse once more raise the question whether this is the beginning of a global crisis or just another 'idiosyncratic' case," wrote Andrew Kenningham of Capital Economics.

The Swiss National Bank, which is Switzerland's central bank, and the Swiss Financial Market Supervisory Authority sought to calm investor fears, saying they were ready to help Credit Suisse if necessary.

Strict rules apply to Swiss financial institutions to "ensure their stability" and Credit Suisse meets the requirements for banks considered systemically important, the regulators said.

"There are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market," they said in a joint statement.

Credit Suisse, founded in 1856, has faced a string of scandals in recent years, including money laundering charges and other issues.

It lost money in 2021 and again in 2022 - its worst year since the financial crisis of 2008 - and has warned it does not expect to be profitable until 2024.

Shares in the firm had already been severely hit before this week - their value falling by roughly two-thirds last year - as customers pulled funds.

The bank's disclosure on Tuesday of "material weakness" in its financial reporting controls renewed investor concerns.

These were intensified when the chairman of the Saudi National Bank, Credit Suisse's largest shareholder, said it would not buy more shares in the Swiss bank on regulatory grounds.

(Source: bbc.com)