Credit Suisse Borrows $53.7 Billion from Swiss National Bank; US Banks Launch $30 Billion Rescue of First Republic Bank
Credit Suisse, Switzerland’s second-largest bank, announced on Wednesday that it would borrow up to 50 billion Swiss Francs ($53.7 billion) from the Swiss National Bank in a “decisive action to pre-emptively strengthen its liquidity.”[0] This comes after the bank’s largest shareholder, Saudi National Bank, said it was unable to invest more money due to regulatory restrictions.[1]
The news sent Credit Suisse shares plummeting by as much as 30%, leading to an abrupt halt in trading.[1] However, the Swiss National Bank declared Credit Suisse well-capitalized and pledged to provide additional liquidity if necessary, prompting the stock to jump 18% on Thursday.[2]
In addition, Credit Suisse said it was offering to buy back around 3 billion francs' worth of debt, relating to 10 U.S. dollar-denominated senior debt securities and four euro-denominated senior debt securities.[3]
Credit Suisse's financial difficulties have prompted legal action from US shareholders, who allege the bank made false or misleading statements about its finances and failed to adequately disclose that it suffered from a “significant” increase in customer outflows at the end of 2022.[1]
Meanwhile, US banks have launched a $30 billion rescue of First Republic Bank to stem the spiraling banking crisis.[4] Treasury Secretary Janet Yellen reassured members of Congress that the US banking system was sound and that American deposits would be there when they needed them.[5]
Ten-year Treasury yields skidded 14 basis points to 3.49% and the 2-year Treasury yield dived 25 basis points to 3.97%.[6] Yesterday, the European Central Bank met to discuss their monetary policy and decided to proceed with increasing their base interest rate by half a percentage point, despite the recent financial upheaval.[7]
Credit Suisse shares fell 10% in morning trade Friday, after soaring over the previous session.[3] Investors fear that the $54 billion lifeline from the Swiss central bank may not be enough to rescue the beleaguered bank.[8] Credit Suisse did not respond to requests for comment.[1]
0. “‘The weakest links are cracking': Investors consider possible Credit Suisse contagion” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/credit-suisse-investors-wary-of-contagion-amid-banking-crisis-fears.html
1. “Credit Suisse: Imperiled global investment bank has CCP-tied official on risk committee” Fox News, 17 Mar. 2023, https://www.foxnews.com/politics/credit-suisse-imperiled-global-investment-bank-ccp-tied-official-risk-committee
2. “Nouriel Roubini says Credit Suisse may be too big to save, risks ‘Lehman moment'” Markets Insider, 15 Mar. 2023, https://markets.businessinsider.com/news/stocks/nouriel-roubini-credit-suisse-too-big-to-save-lehman-moment-2023-3
3. “Credit Suisse sheds another 8% as traders digest emergency liquidity” CNBC, 17 Mar. 2023, https://www.cnbc.com/2023/03/17/credit-suisse-sheds-another-5percent-as-traders-digest-emergency-liquidity.html
4. “SVB parent files for bankruptcy; Credit Suisse shares slide again amid banking crisis – live” The Guardian, 17 Mar. 2023, https://www.theguardian.com/business/live/2023/mar/17/markets-us-banks-first-republic-rescue-business-live
5. “Silicon Valley Bank collapse and other key moments in the week that rocked banks” NPR, 17 Mar. 2023, https://www.npr.org/2023/03/17/1163911866/5-big-moments-from-the-week-that-rocked-the-banking-system
6. “Dow Jones Futures Fall: Credit Suisse Taps Swiss National Bank; First Republic Dives On Sales Report | Investor's …” Investor's Business Daily, 16 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-rise-as-credit-suisse-taps-54-billion-from-swiss-national-bank/
7. “Wall Street banks organise a bailout operation as financial crisis deepens” WSWS, 17 Mar. 2023, https://www.wsws.org/en/articles/2023/03/17/obwo-m17.html
8. “Credit Suisse got its lifeline. Investors are unconvinced” CNN, 17 Mar. 2023, https://www.cnn.com/2023/03/17/investing/credit-suisse-shares-drop-despite-lifeline/index.html
