Swiss Central bank to lend $54 billion to Credit Suisse to increase liquidity

When the lender's stock hit a new low on Thursday, Credit Suisse said that it would borrow up to $54 billion from the Swiss central bank to increase liquidity.

According to a statement posted on the bank's website, it will also use a "short-term liquidity facility" and buy back around $3 billion in debt.

The 166-year-old company Credit Suisse was fighting for its life as of Wednesday. A new low was reached for its shares on the SIX Swiss Exchange, which fell 24%, and the cost of its bonds also fell significantly. Financial contracts that provide insurance against a bank default saw their prices soar to all-time highs.

Following the closure of the European stock market on Wednesday, the Swiss National Bank and Finma, the nation's financial watchdog, jointly released a statement endorsing Credit Suisse's sound financial standing and pledging the central bank's support if needed. Credit Suisse announced its intention to borrow 50 billion Swiss francs from the Swiss National Bank a few hours later.

Ammar al-Khudairy, the chairman of the Saudi National Bank, the bank's largest shareholder, made a remark that served as the immediate spark for a dangerous decline in the stock price of the institution. Mr. al-Khudairy stated that the state-owned bank will not invest more money in Credit Suisse in a televised interview with Bloomberg News.

Years of errors and conflicts have damaged Credit Suisse, costing it two chief executives in a span of three years. They include a variety of controversies, from involvement in money laundering to spying on former employees, as well as substantial trading losses linked to the collapses of the lender Greensill Capital and investment firm Archegos.

A comprehensive recovery plan for the company has been implemented, and it calls for thousands of layoffs as well as the separation of its Wall Street investment bank. Investors have questioned whether ongoing losses and client departures have jeopardized that endeavor, as the company lost approximately $147 billion in customer deposits in the final three months of 2022.

By fLEXI tEAM