Credit Swiss takes $54bn loan from Swiss National Bank

Beleaguered Swiss lender Credit Swiss has agreed to take a CHF50bn ($54bn) loan from the Swiss National Bank after its shares tumbled on Wednesday, sparking a selloff in global financial markets.

CS said it was also making a cash tender offer in relation to 10 US dollar-denominated senior debt securities for up to $2.5bn and a separate cash tender offer in relation to four Euro-denominated senior debt securities for €500m.

Chief executive officer Ulrich Koerner said: "These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.

"We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs."

Shares in Credit Suisse crumbed more than 40% on Wednesday after top shareholder Saudi National Bank said it would not provide the lender with any further financial support.

According to reports, asked whether his bank was open to further injections of cash if there was another call for more liquidity, Saudi National Bank's chairman Ammar Al Khudairy said: "The answer is absolutely not, for many reasons outside the simplest reason which is regulatory and statutory."

However, he later told CNBC that Wednesday’s panic was not warranted.

"There has been no discussions with Credit Suisse about providing assistance," he told CNBC’s Hadley Gamble. "I don’t know where the word ‘assistance’ came from, there has been no discussions whatsoever since October."

Earlier this week, Credit Suisse said it had found "material weakness" in its financial statements, just weeks after it reported a CHF7.3bn loss for 2022 - its largest since the 2008 financial crisis.

Victoria Scholar, head of investment at Interactive Investor, said: "Credit Suisse has been embroiled in scandal after scandal in recent years, punishing its share price and causing painful client outflows. The Swiss lender was linked to the collapse of Greensill Capital as well as the US hedge fund Archegos. It was also found guilty of helping to launder money tied to the Bulgarian mafia in 2021. Last year rumours on social media swirled about the risks around Credit Suisse, prompting tens of billions of outflows."

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Credit Suisse is the first major bank, deemed too big to fail, to take up the offer of an emergency lifeline. The announcement that it will draw on emergency funds from the Swiss National Bank underlines how fragile the lender had become, as the withdrawal of deposits continued at pace and confidence seeped away.

"It also highlights the lightning speed of the global fall-out of Silicon Valley Bank’s collapse, which has shaken the banking sector, and prompted investors spotting weaknesses in other institutions, to race for the exit. The $54bn rescue wad is staunching worries about a bigger run on Credit Suisse and the repercussions for other institutions around the world exposed to its operations."