Troubled Swiss bank Credit Suisse will boost its liquidity by using an option to borrow up to 50 billion Swiss francs (1.2 trillion CZK) from the Swiss central bank. This is reported by the Reuters agency with reference to the statement of the second largest Swiss bank.
On Wednesday, local financial institutions informed that the Swiss central bank will provide Credit Suisse with liquidity “if necessary”. They also said that Credit Suisse “meets the capital and liquidity requirements of systemically important banks”.
Today, the bank described its move as a “decisive” and at the same time “preventive” strengthening of liquidity.
Shares of Credit Suisse fell as much as 30 percent on Wednesday. They later erased part of the losses, but still wrote off over 24 percent. The reason for the fall in shares was the statement of Credit Suisse’s largest investor, which is the financial institution Saudi National Bank (SNB), that it could no longer provide further financial assistance to the Swiss bank. SNB is the largest commercial bank in Saudi Arabia.
Shares in Credit Suisse have lost nearly three-quarters of their value in the past 12 months, falling to historic lows. In 2008, their value was around 80 Swiss francs, on Wednesday they closed at 1.7 Swiss francs.
Credit Suisse used to be a symbol of Swiss reliability, but its reputation has been damaged by a series of scandals. The bank suffered huge losses due to the bankruptcy of the financial company Greensill, which backed Liberty Steel, and the collapse of the American fund Archegos. Other scandals included an unprecedented domestic prosecution of money laundering for a criminal gang. The bank has completely changed its top management and is undergoing its second restructuring plan in several years.