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London (CNN) Hours after the Swiss central bank announced it was ready to provide financial support to Credit Suisse, the beleaguered megabank said investors had the cash they needed to survive. accepted the offer, hoping to reassure
Credit Suisse has announced that it will borrow up to CHF 50 billion ($53.7 billion) from the Swiss National Bank. Investors on Wednesday sent shares in the country’s second-largest bank plummeting by as much as 30% of his own.
The bank called the loan “a decisive move to pre-emptively strengthen liquidity.”
“This additional liquidity will help Credit Suisse’s core capabilities as it takes the necessary steps to create a simpler, more focused bank built around the needs of its customers. We will support our business and our customers,” the bank said in a statement.
In addition to lending from central banks, Credit Suisse also said it has bought back billions of dollars of its own debt to manage debt and interest costs. The offer covers $2.5 billion of US dollar-denominated bonds and his €500 million ($529 million) euro-denominated bonds.
Founded in 1856, the venerable but troubled bank is one of the world’s largest financial institutions, and together with just 30 other banks, including JP Morgan Chase, Bank of America and Bank of China classified as “systemically important banks”. .
Asian stock markets fell sharply on Thursday but rebounded sharply from their lows after Credit Suisse’s actions, boosted by the bank’s determination to restore confidence in its operations.
The Swiss National Bank (SNB) said Wednesday in a joint statement with Switzerland’s financial market regulator FINMA that Credit Suisse (CS) has imposed “strict capital and liquidity requirements” on banks important to the broader financial system. ‘, he said.
“If needed, SNB will provide liquidity to CS,” they said.
Investors already nervous after last week’s collapse of US Silicon Valley Bank sold stakes in the distressed Swiss bank earlier in the day, with its biggest backer offering more money. After seemingly refusing an offer, it plummeted to a record low. .
In a statement, the Swiss authorities said: “The problems with specific US banks do not pose a direct contagion risk to Swiss financial markets.”
“Due to the current turmoil in the US banking market, there are no direct signs of contagion in Swiss financial institutions,” the statement continued.
Saudi backers ‘not inclined’ to raise more funding
The chairman of the Saudi National Bank, the largest shareholder of Credit Suisse, said Wednesday that it would not increase its stake in Credit Suisse following a capital increase last fall.
“There is absolutely no answer, for many reasons,” Ammar Al-Qudairi told Bloomberg during a conference in Saudi Arabia. We own 9.8% of the bank, and above 10% we have all kinds of new rules: regulators, European regulators or Swiss regulators,” he said. “We have no desire to enter a new regulatory regime.”
Once a Wall Street mogul, Credit Suisse has suffered a string of failures and compliance failures over the past few years that have damaged its reputation with customers and investors and left several executives out of work.
Customers withdrew CHF 123 billion ($133 billion) from Credit Suisse last year, mainly in the fourth quarter, and banks reported annual net losses of CHF 7.3 billion ($7.9 billion), the largest since the 2008 global financial crisis Did. .
In October, the lender embarked on a “radical” restructuring plan that involved cutting 9,000 full-time jobs, spinning off an investment bank and focusing on asset management.
Al Khudairy said he was satisfied with the restructuring, adding that he did not believe the Swiss lender would need additional funds. Others are not so sure.
Morningstar European banking analyst Johann Scholz said Credit Suisse may not have enough capital to absorb losses in 2023 as funding costs have become prohibitive. Stated.
“We believe that Credit Suisse needs another right to stem client outflow and ease the concerns of wholesale funders. [share] We believe the alternative would be to sell or separate the healthy businesses that are part of Swiss banking, wealth management, wealth management and possibly investment banking. It is listed. ”
‘It’s not just a Swiss problem’
The bank’s share price last fell 24% in Zurich on Wednesday as the cost of buying insurance against the risk of default at Credit Suisse hit a record high, according to S&P Global Market Intelligence.
French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank fell between 8% and 12%, with the crash spilling over to other European bank stocks. Italian and British banks also fell.
Two supervisory sources told Reuters the ECB had contacted banks asking about their exposure to Credit Suisse. The ECB declined to comment.
Credit Suisse’s problems were widely publicized, but with a fortune of around CHF 530 billion ($573 billion), it could be a much bigger headache.
“[Credit Suisse] “Credit Suisse is not just a Swiss problem, it is a global problem,” said Andrew Kenningham, chief European economist at Capital Economics.
The blow continues for Switzerland’s second largest bank. On Tuesday, it acknowledged “significant weaknesses” in its financial reporting and scrapped executive bonuses.
In its annual report, Credit Suisse said it determined that “the group’s internal controls over financial reporting were not effective” because it failed to adequately identify potential risks to its financial statements.
The bank is urgently drawing up a “repair plan” to tighten its control.
Credit Suisse Chief Executive Officer Ulrich Kellner told Bloomberg Television on Tuesday that the bank said on Monday that despite the market turmoil caused by the failures of SVB and Signature Bank in the United States, the bank said: In terms of capital inflow,” he said.
Overall, outflows from banks “moderated significantly” after customers withdrew CHF111 billion ($122 billion) in the three months to December, Körner added. The bank said in its annual report that the outflow had not yet reversed by the end of last year.
— Olesya Dmitracova and Livvy Doherty contributed to this article.
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