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Credit Suisse borrows $54 billion from Swiss central bank to support its financial position

Credit Suisse, a leading Swiss financial institution, announced on March 16 that it would borrow up to 50 billion Swiss francs, which is equivalent to $53.68 billion, from the Swiss National Bank. The bank will receive this amount under a covered loan facility and a short-term liquidity facility. The loan is expected to support Credit Suisse’s core business and its customers.

Credit Suisse’s spokesperson said that the loan will also enable the bank to take necessary steps to improve its financial strength and focus on meeting the needs of its customers. Additionally, Credit Suisse revealed that it plans to make a tender offer for ten senior dollar bonds worth up to $2.5 billion and four euro senior notes tranches with a total amount not exceeding 500 million euros.

This move from Credit Suisse was made amid concerns about the bank’s financial position after it suffered a net loss of CHF 1.4 billion in the fourth quarter of 2022, which was above analysts’ expectations of 1.32 billion francs. This led to a loss for the full year of 7.3 billion francs. Furthermore, clients withdrew over 110 billion francs from Credit Suisse in the fourth quarter due to the wrongdoing scandal, regulation, and litigation risks.

Following this announcement, the Swiss National Bank and FINMA, Switzerland’s financial market regulator, pledged to provide liquidity to assist Credit Suisse if deemed necessary. The Swiss financial regulator’s decision to intervene and offer support comes after the bank’s share price plummeted.

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