Banking giant Credit Suisse said Thursday it will borrow $54 billion from Switzerland’s central bank, the latest move by authorities to calm investors and ease mounting fears of a global banking crisis.
The move to shore up Switzerland’s second-largest commercial bank saw its shares soar as markets reacted well in Europe and the United States. It was a marked reversal on a day earlier, when Credit Suisse shares slumped and intensified fears of a possible run on bank deposits after the collapse of two U.S. banks last week.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders,” CEO Ulrich Koerner said in a statement that was published in the middle of the night in Zurich.
Markets responded well to the news, with futures up in London, Frankfurt and Wall Street. Bank stocks rose across the board, with Credit Suisse shares settling to a gain of around 23% after an initial rise of 30%
Trading was volatile in Asian markets, however.
“What we’ve seen overnight is the Swiss central bank saying ‘no, we will not let this get into a disorderly collapse,’” Sir John Gieve, a former deputy governor at the Bank of England, told BBC News.
The deal comes after Credit Suisse led a selloff in bank shares as its share price hit a record low Wednesday, fueling new fears about the health of global banks following the collapse of Silicon Valley Bank and Signature Bank in the U.S.
Credit Suisse’s longstanding problems were compounded when its largest investor, the Saudi National Bank, said it could not provide more financial assistance because it was wary of regulatory checks that would kick in.
On Thursday the bank’s chairman, Ammar Al Khudairy, said that the market turmoil in shares of the Swiss lender was “unwarranted.”
“If you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses,” Al Khudairy…
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