Credit Suisse Stock Surges After Swiss National Bank Loan and Debt Buyback Announcement
Shares of Credit Suisse surged Thursday after the bank said it would tap a loan from the Swiss National Bank, followed by an announcement it would buy back 3 billion Swiss francs worth of its debt.[0] The loan from the Swiss National Bank, which is worth 50 billion Swiss francs ($54 billion), is part of the bank’s plan to strengthen its liquidity and shore up investor confidence.[1]
The stock surged 32% in opening trade, rallying as the Swiss banking giant said it would tap its central bank for 50 billion francs and launching an offer to buy beaten-up debt.[0] Credit Suisse’s bonds also rose, but they have a lot of ground to catch up after investor confidence in the bank crumbled this week.[2]
On Thursday, the Swiss National Bank declared that it would offer liquidity to Credit Suisse, subject to the provision of appropriate collateral.[3] This led to a conversation between the Swiss National Bank and the financial regulator FINMA, who announced last evening that the SNB would supply liquid funds “if needed”.[4]
These measures demonstrate decisive action to strengthen Credit Suisse as it continues its strategic transformation to deliver value to its clients and other stakeholders.[5] Neil Shearing, chief economist at Capital Economics, wrote in a note to clients that the problems at Credit Suisse are very different to those that brought down Silicon Valley Bank a few days ago.[6] However, he warned that as interest rates rise, vulnerabilities are lurking in the financial system, and that key areas to monitor are smaller European banks and shadow banks.[6]
At the beginning of trading, an index of Europe's bank stocks increased 3.3%, causing a rally in European bank shares.[3] Live updates of what’s moving markets, including the Dow, S&P 500 and Nasdaq Composite, are available to track the latest stock market news and in-depth analysis.[2] The European Central Bank will also announce its interest rate decision later today at 1.15pm GMT.[7]
0. “Credit Suisse shares jump after saying it will borrow from SNB and buy back debt” MarketWatch, 16 Mar. 2023, https://www.marketwatch.com/story/credit-suisse-shares-jump-after-saying-it-will-borrow-from-snb-and-buy-back-debt-27a46b20
1. “Credit Suisse, First Republic, Snap, Adobe, UiPath, and More Stock Market Movers” Barron's, 16 Mar. 2023, https://www.barrons.com/articles/stock-market-movers-350a5c
2. “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
3. “Credit Suisse stocks recover live updates: Swiss National Bank announces support, European markets up” AS USA, 16 Mar. 2023, https://en.as.com/latest_news/credit-suisse-stocks-recover-live-updates-swiss-national-bank-announces-support-european-markets-up-n
4. “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
5. “‘The weakest links are cracking': Investors consider possible Credit Suisse contagion” CNBC, 16 Mar. 2023, https://www.cnbc.com/2023/03/16/credit-suisse-investors-wary-of-contagion-amid-banking-crisis-fears.html
6. “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
7. “Futures Rally Evaporates as Banking Woes Linger: Markets Wrap” Yahoo News, 16 Mar. 2023, https://news.yahoo.com/bank-fears-rock-markets-traders-223116732.html
