Credit Suisse announced it will be borrowing up to 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank under a covered loan facility and a short-term liquidity facility.
The decision comes shortly after shares of the lender fell sharply Wednesday, hitting an all-time low for a second consecutive day after its top investor Saudi National Bank was quoted as saying it won’t be able to provide further assistance.
The latest steps will “support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs,” the company said in an announcement.
In addition, the bank is making a cash tender offer in relation to ten U.S. dollar denominated senior debt securities for an aggregate consideration of up to $2.5 billion – as well as a separate offer to four Euro denominated senior debt securities for up to an aggregate 500 million euros, the company said.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” Credit Suisse CEO Ulrich Koerner said.
“We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs,” he said.
U.S. futures climbed, with the Dow Jones Industrial Average futures gaining by more than 100 points after the announcement. S&P 500 futures also rose 0.45% and Nasdaq 100 futures climbed 0.54%.
‘Little bit of panic’
Saudi National Bank told CNBC that Credit Suisse has not asked for financial assistance and that Wednesday’s panic was unwarranted.
“There has been no discussions with Credit Suisse about providing assistance,” said Ammar Al Khudairy, chairman of Saudi National Bank, Credit Suisse’s largest shareholder.
“I don’t know where the word ‘assistance’ came from, there has been no discussions whatsoever since October,” he told CNBC’s Hadley Gamble.
He added that the latest market turmoil in the banking sector is “isolated” and stems from “a little bit of panic.”
“If you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses … it’s panic, a little bit of panic,” he said on CNBC’s “Capital Connection.”
‘Interconnected’ banks
In the wake of the Credit Suisse saga, Tabbush Report founder Daniel Tabbush emphasized that a wider concern for the banking sector is trust.
“The obvious problem is a restoration of trust, and to stop the deposit flight, which maybe this has been partly or wholly addressed by the central bank,” he told CNBC’s “Street Signs Asia.”
Credit Suisse timeline
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“But what is more difficult is not simply containing its issues, is really how this feeds through to so many interconnected banks, where there are Credit Swiss contracts – where there are derivatives, where there are facilities – which is really the next order issue,” he said.
Banks in the Asia-Pacific also pared some earlier losses – Japan’s Topix earlier plunged by more than 2% and last traded 1.4% lower.
The Commonwealth Bank of Australia pared most of its losses in volatile trading – it traded 0.15% lower after falling as much as 1.97% earlier. Westpac Banking and National Australia Bank fell as much as 2.35% and 1.81% respectively before erasing some declines. They were last down 1.34% and 0.58% lower, respectively.
Some South Korean banks also fell as much as 2% earlier before partially reversing declines.
The Swiss franc remained volatile following the announcement, strengthening 0.17% to 0.9315 against the U.S. dollar. The Japanese yen also strengthened further to trade at 132.86 against the greenback.
Earlier this week, Credit Suisse chairman Axel Lehmann told CNBC’s Hadley Gamble that the recent collapse of Silicon Valley Bank is “local and contained.”
When asked if he would rule out some kind of government assistance in the future, Lehmann said, “We are regulated, we have strong capital ratios, very strong balance sheet. We are all hands on deck. So that’s not the topic whatsoever.”
– CNBC’s Lim Hui Jie contributed to this report.
