Credit Suisse stock soar after $54B Loan from Swiss national bank
Swiss National Bank steps in to halt Credit Suisse collapse with $54 billion loan
Credit Suisse has been granted a lifeline from the Swiss National Bank (SNB) after suffering two days of historic lows. The central bank has agreed to lend the beleaguered bank CHF 50bn ($54bn) on credit for various periods. The move is largely intended to halt the collapse of the bank, following a fall of 24% in Credit Suisse's shares on the Zurich exchange and a 14% fall on Wall Street.
Credit Suisse intends to use the money to strengthen its balance sheet and reduce its debt, as it faces mounting pressure from shareholders and regulators over flaws in its financial reporting in 2021 and 2022. The bank has submitted an offer to purchase its bonds in the US for $2.5bn and for European Credit Suisse bonds in the amount of €500m, as part of its strategy to reduce debt.
In response to the SNB's decision, Credit Suisse CEO Ulrich Koerner expressed his gratitude, stating, "These steps reflect a decisive action to strengthen Credit Suisse as we continue our strategic transformation plan to deliver value to our customers and our shareholders". He went on to confirm that his team is "determined to move forward quickly in a process that will lead to a focused and simpler bank built around the needs of the customers".
The news of the loan provided a much-needed boost for Credit Suisse, whose shares soared over 30% at market open on Thursday.
Credit: Yahoo finance
However, the stock's rally cooled slightly in early trading, but shares were still up 23% at 8:48 a.m. London time. The SNB and the Swiss Financial Market Supervisory Authority said in a statement that Credit Suisse "meets the capital and liquidity requirements imposed on systemically important banks".
The Swiss National Bank's decision was also welcomed by other European bank stocks, which rallied in early trade on Thursday. UBS shares followed, up 4.9%, Commerzbank gained 3.9%, Santander was up 3.%, shares of FinecoBank gained 3.4% and Barclays was up 3.3%. Bank stocks as a whole were up by 1.8%.
Meanwhile, Credit Suisse's largest shareholder, the Saudi National Bank, said that panic over the bank was "unwarranted". Chairman Ammar Al Khudairy told CNBC, "If you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses". He also confirmed that the Saudi National Bank has had no discussions with Credit Suisse about providing further financial assistance.