Credit Suisse said on Thursday it would borrow almost $54bn (R996bn) from the Swiss central bank to shore up the group after its share prices fell.
The revelation came hours after the Swiss National Bank said the lender’s capital and liquidity levels were adequate for a “systemically important bank”, even as it pledged to make liquidity available when needed.
In a statement, Credit Suisse said the central bank loan of up to 50 billion francs ($53.7 billion) would “support … key businesses and customers,” adding that it was also making buyback offers for about $3 billion in debt. :
“These measures represent decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” CEO Ulrich Koerner said in a statement.
“My team and I are determined to move forward quickly to provide a simpler and more focused bank based on customer needs.”
Credit Suisse, which has been hit by a series of scandals in recent years, saw its share price plummet on Wednesday after major shareholder Saudi National Bank refused to invest more in the group, citing regulatory restrictions.
Its shares fell more than 30 percent to a record low before recovering to end the day down 24.24 percent at 1,697 Swiss francs.
Credit Suisse’s market value had already been hit hard this week by fears of contagion from the collapse of two US banks, as well as its annual report citing “material weaknesses” in internal controls.
Analysts warned of growing concerns about the bank’s viability and the impact on the larger banking sector, as shares of other lenders fell on Wednesday after recovering the previous day.
Credit Suisse is one of 30 banks globally deemed too big to fail, forcing it to provide more cash to weather the crisis.
Neil Wilson, chief market analyst at trading firm Finalto, said on Wednesday that if the bank is “in serious existential trouble, we’re in a whole other world of pain.”
Shares in Credit Suisse were worth 12.78 Swiss francs in February 2021, but since then the bank has weathered a barrage of problems that have eroded its market value.
It was hit by the explosion of the American fund Archegos, which cost more than 5 billion dollars.
Its asset management arm was rocked by the bankruptcy of British financial firm Greensill, in which about $10 billion was allocated through four funds.
For the 2022 financial year, the bank recorded a net loss of 7.3 billion Swiss francs.
It came amid massive withdrawals by its clients, including the wealth management arm, one of the operations the bank plans to refocus on as part of a major restructuring plan.