Credit Suisse gets $54 billion lifeline to stave off collapse

Credit Suisse on Thursday said it was borrowing up to $54 billion from the Swiss central bank to strengthen its liquidity after a massive crash in its shares in the stock markets triggered fears of a bank deposit crisis.

In a joint statement on Wednesday, the Swiss financial regulator FINMA and the nation’s central bank sought to ease investor fears around Credit Suisse, saying it “meets the capital and liquidity requirements imposed on systemically important banks.” They said the bank could access liquidity from the central bank if needed.

Credit Suisse shares had plunged after its largest investor said it could not provide more financial assistance because of regulatory constraints.

In its statement early Thursday, Credit Suisse said it is exercising its option to borrow from the Swiss National Bank up to 50 billion Swiss francs ($54 billion).

Regulators on Wednesday had sought to ease investor fears around Credit Suisse, which followed worries sparked by last week’s collapse of Silicon Valley Bank and Signature Bank, two U.S. mid-size banks.

Asian stocks had followed Wall Street’s plunge on Thursday and investors switched to gold, bonds and the dollar, leaving markets on edge. The bank’s announcement in the morning helped reduce some losses though trade was volatile.

Investor focus is now on any action by central banks and other regulators in Asia to restore confidence in the banking system as well as any exposure regional businesses may have to Credit Suisse.

Credit Suisse said it welcomed the statement of support from the Swiss National Bank and FINMA.

Credit Suisse would be the first major global bank to be given such a lifeline since the 2008 financial crisis – though central banks have extended liquidity more generally to banks during times of market stress including the coronavirus pandemic.

SVB’s collapse last week, followed by that of Signature Bank two days later, sent global bank stocks on a roller-coaster ride this week, with investors not quite convinced by assurances from U.S. President Joe Biden and emergency steps giving banks access to more funding.