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Credit Suisse secures 50bn Swiss francs lifeline

Credit suiisse
Credit Suisse

Credit Suisse, one of Europe’s biggest banks, was handed a 50 billion Swiss francs (£44.5bn) loan from its central bank last night.

Regulators pledged a liquidity lifeline in an unprecedented move by a central bank after seeing 30% wiped off its value in a frenzy of selling on global stock markets. Its shares were temporarily suspended.

The deal saw its shares reverse yesterday’s nosedive, as almost all the loss was recovered in early trading today.

“Credit Suisse is taking decisive action to pre-emptively strengthen its liquidity,” Credit Suisse said in a statement.

“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.”

Credit Suisse is the first major global bank to be given such a lifeline since the 2008 financial crash. 

The collapse in the US of Silicon Valley Bank last week and Signature Bank two days later have rocked global bank stocks as investors fret over another meltdown in the sector.

The FTSE lost £75bn in combined market value by the close on Wednesday after suffering its deepest fall on a points basis since the early days of the COVID crisis.

Gary Ng, senior economist at Natixis Corporate and Investment Bank, told the Reuters agency that investors might be worried about Silicon Valley Bank and Credit Suisse for different reasons, but both suffered from the side effect of high-interest rates.

“The underlying economic stress may emerge more frequently … and it is possible to see more black swans in an uncertain environment,” he said.

The Swiss lender’s latest move came after CEO Ulrich Koerner said in an interview earlier on Wednesday that the bank’s “capital, our liquidity basis is ver,y very strong.”

He insisted: “We fulfil and overshoot basically all regulatory requirements.”

Credit Suisse Group last month reported its biggest annual loss since the 2008 global financial crisis after rattled clients pulled billions of dollars from the bank. It warned that a further “substantial” loss would come this year.

The bank, Switzerland’s second biggest, has begun a major overhaul of its business, cutting costs and jobs to revive its fortunes, including creating a separate business for its investment bank under the CS First Boston brand. The bank raised 4 billion Swiss francs from investors in December.

On Wednesday, it also announced offers for senior debt securities for cash of up to 3 billion francs.

The bank said it had also accelerated cost cuts and was well on track to deliver 2.5 billion francs of cost-base reductions by 2025, including 1.2 billion francs in 2023.

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