Zurich A surprising turn of events at Credit Suisse: The ailing Swiss bank now wants to take out loans from the Swiss National Bank (SNB) of up to CHF 50 billion (EUR 50.7 billion). The financial institution announced this in an ad hoc announcement on Thursday night. In this way, the bank wants to “preventively strengthen liquidity,” the bank said. The loans come from two different SNB programs and are fully collateralised.
With the move, Credit Suisse is the first global systemically important bank since the financial crisis to receive a customized lifeline.
On Wednesday evening, the Swiss National Bank promised the crisis-ridden Credit Suisse that it would provide them with fresh money in an emergency. “If necessary, the SNB will make liquidity available to CS,” said a joint statement by the two institutions.
However, it was said that this step was not necessary for the time being: “Credit Suisse meets the capital and liquidity requirements for systemically important banks,” emphasized the supervisors. The crisis affecting smaller banks in the USA does not pose a direct risk of contagion for the Swiss financial market.
Statements by a major Saudi shareholder caused chaos at Credit Suisse on Wednesday. For regulatory reasons, he had ruled out increasing his stake in Credit Suisse. The bank’s shares fell by 31 percent to an all-time low of CHF 1.55.
In the late afternoon, the stock recovered somewhat, closing around 24 percent down. The sell-off swept across the European banking industry.
The Swiss supervisors now said: “The market value and the value of debt securities of Credit Suisse have been particularly badly affected by market reactions in the last few days. Finma is in very close contact with the bank and has all the information relevant to supervisory law.”
Finma and the SNB are following developments very closely and are also in contact with the Swiss finance department “to ensure the stability of the Swiss financial system,” it said.
Top management appeases bank customers
It had previously become known that the struggling Credit Suisse had requested communication support from the supervisors. First, the “Financial Times” reported on the request. Reassuring statements by CEO Ulrich Körner and Chairman of the Board of Directors Axel Lehmann had previously had no effect.
Körner had assured: “Our capital and liquidity base is very, very strong.” Lehmann added that state aid for Credit Suisse was “not an issue”.
The head of Credit Suisse Switzerland, André Helfenstein, also tried to reassure bank customers on Wednesday in view of the falling share price. Credit Suisse is still a “very well capitalized bank”, he emphasized in an interview with “Blick TV”.
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Of course, the bank is not happy with where the share price is, he said. However, this has nothing to do with the security of customer deposits. The slump in the share price is due to the fact that the bank stocks are under pressure because of the problems at US regional banks.
It’s more restless around us. Head of Credit Suisse Switzerland, André Helfenstein
The Swiss business of Crédit Suisse, which he manages, is well positioned and working well, said Helfenstein. The bank now wants to be close to the customers and also consistently continue the restructuring of the bank. In two years, Crédit Suisse will be a different bank than it is today, it will be more stable and concentrate on Switzerland and the wealth management business.
However, because of the restructuring and the “challenging financial year 2022”, the big bank is in sight with a loss in the billions, said Helfenstein. “It’s more restless around us.”
Jefferies analyst Tom Jenkins emphasized in a flash assessment that Credit Suisse’s capital base is solid. The most recent equity ratio was 14.1 percent – and thus significantly above the requirement of the Swiss financial regulator.
“These are big numbers,” Jenkins said, which would visually suggest a bank in good shape. The problem is that the soothing words of top management recently fell on “deaf ears”.
With agency material.
More: The banking crisis reaches Europe – Credit Suisse shares temporarily collapse by 31 percent