Credit Suisse Stock Surges 32% After Swiss National Bank Loan & Debt Buyback
Shares in Credit Suisse surged 32% at the start of trading in Zurich on Thursday, after the bank announced it would tap a loan from the Swiss National Bank and launch an offer to buy beaten-up debt.[0] The second-biggest Swiss lender said it would use a 50-billion-franc ($54 billion) facility from the country’s central bank in what it called “decisive action” to strengthen its liquidity.[1]
The announcement follows the failure of Silicon Valley Bank, the second-largest US bank failure ever, and the closure of Signature Bank and wind down of Silvergate Bank, which have caused investors to brace for a full-blown crisis in the sector.[2]
The Swiss National Bank confirmed Thursday that it will provide liquidity to Credit Suisse “against sufficient collateral,” prompting talk with the Swiss National Bank and financial regulator FINMA.[3] In addition, Credit Suisse also said it would buy back 3bn Swiss francs worth of its debt.[4]
Neil Shearing, chief economist at Capital Economics, commented that “the problems at Credit Suisse are very different to those that brought down SVB a few days ago. But they serve as a reminder that as interest rates rise, vulnerabilities are lurking in the financial system. Key areas to monitor are smaller European banks and shadow banks.”[5]
Credit Suisse’s stock crash on Wednesday, falling as much as 30%, has caused concern over the health of global banks.[6] The Swiss bank's decision to borrow from the Swiss National Bank and buy back its own debt has helped to calm investors’ nerves.[4]
0. “Stock Market Today: Credit Suisse Shares Leap; Dow Futures Edge Down” The Wall Street Journal, 16 Mar. 2023, https://www.wsj.com/livecoverage/stock-market-news-today-03-16-2023
1. “Credit Suisse, Snap, Adobe, UiPath, and More Stock Market Movers” Barron's, 16 Mar. 2023, https://www.barrons.com/articles/stock-market-movers-350a5c
2. “Credit Suisse just the ‘tip of the iceberg' amid SVB fiasco: JPMorgan” Markets Insider, 15 Mar. 2023, https://markets.businessinsider.com/news/stocks/svb-bank-crisis-credit-suisse-jpmorgan-stock-market-outlook-contagion-2023-3
3. “Nouriel Roubini says Credit Suisse may be too big to save, risks ‘Lehman moment'” Markets Insider, 15 Mar. 2023, https://markets.businessinsider.com/news/stocks/nouriel-roubini-credit-suisse-too-big-to-save-lehman-moment-2023-3
4. “Credit Suisse shares surge after bank agrees £44bn lifeline – business live” The Guardian, 16 Mar. 2023, https://www.theguardian.com/business/live/2023/mar/16/credit-suisse-borrowing-liquidity-swiss-francs-central-bank-ecb-lagarde-jeremy-hunt-business-live
5. “Credit Suisse's $50 billion lifeline calms panic over banks” CNN, 16 Mar. 2023, https://www.cnn.com/2023/03/16/investing/credit-suisse-snb-loan-shares/index.html
6. “Credit Suisse Teeters as Shares Slide 30 Percent” The Daily Beast, 15 Mar. 2023, https://www.thedailybeast.com/credit-suisse-teeters-as-shares-slide-28-percent
