Credit Suisse to borrow $54 billion from Swiss central bank

Credit Suisse said it would exercise an option to borrow up to 50 billion francs ($53.7 billion) from the central bank

Swiss bank Credit Suisse said on March 16 it will move to shore up its finances, borrowing up to $54 billion from the central bank after its shares plunged, dragging down other major European lenders in the wake of bank failures in the United States.

Credit Suisse said it would exercise an option to borrow up to 50 billion francs ($53.7 billion) from the central bank.

“This additional liquidity would 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 bank said.

Also read: Explained | What caused Silicon Valley Bank’s failure?

Fanning new fears about the health of financial institutions following the recent collapse of Silicon Valley Bank and Signature Bank in the U.S., at one point, Credit Suisse shares lost more than a quarter of their value on March 15.

The share price hit a record low after the bank’s biggest shareholder — the Saudi National Bank — told news outlets that it would not put more money into the Swiss lender, which was beset by problems long before the U.S. banks collapsed. The Saudi bank is seeking to avoid regulations that kick in with a stake above 10 per cent, having invested some 1.5 billion Swiss francs to acquire a holding just under that threshold.

The turmoil prompted an automatic pause in trading of Credit Suisse shares on the Swiss market and sent shares of other European banks tumbling, some by double digits.