Thursday, March 23, 2023

Credit Suisse to borrow up to nearly $54 billion from Swiss National Bank

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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.

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“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,” he said, referring to the Swiss Financial Market Supervisory Authority.

“My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”

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.

Panic over Credit Suisse is 'unwarranted,' Saudi National Bank chairman says

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

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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.

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