Credit Suisse announced it should be borrowing as much as 50 billion Swiss francs ($53.68 billion) from the Swiss National Bank under a covered loan facility and a short-term liquidity facility.
The choice comes shortly after shares of the lender fell sharply Wednesday, hitting an all-time low for a second consecutive day after its top investor Saudi National Bank was quoted as saying it won’t give you the option to offer further assistance.
The newest steps will “support Credit Suisse’s core businesses and clients as Credit Suisse takes the mandatory steps to create a less complicated and more focused bank built around client needs,” the corporate said in an announcement.
As well as, the bank is making a money tender offer in relation to 10 U.S. dollar denominated senior debt securities for an aggregate consideration of as much as $2.5 billion – in addition to a separate offer to 4 Euro denominated senior debt securities for as much as an aggregate 500 million euros, the corporate said.
“These measures show decisive motion to strengthen Credit Suisse as we proceed our strategic transformation to deliver value to our clients and other stakeholders,” Credit Suisse CEO Ulrich Koerner said.
“We thank the SNB and FINMA as we execute our strategic transformation,” he said, referring to the Swiss Financial Market Supervisory Authority.
“My team and I are resolved to maneuver forward rapidly to deliver a less complicated and more focused bank built around client needs.”
U.S. futures climbed, with the Dow Jones Industrial Average futures gaining by greater than 100 points after the announcement. S&P 500 futures also rose 0.45% and Nasdaq 100 futures climbed 0.54%.
‘Little little bit of panic’
“There was no discussions with Credit Suisse about providing assistance,” said Ammar Al Khudairy, chairman of Saudi National Bank, Credit Suisse’s largest shareholder.
“I do not know where the word ‘assistance’ got here from, there was no discussions in anyway since October,” he told CNBC’s Hadley Gamble.
He added that the most recent market turmoil within the banking sector is “isolated” and stems from “a bit of little bit of panic.”
“Should you take a look at how your complete banking sector has dropped, unfortunately, numerous people were just on the lookout for excuses … it’s panic, a bit of little bit of panic,” he said on CNBC’s “Capital Connection.”
‘Interconnected’ banks
Within the wake of the Credit Suisse saga, Tabbush Report founder Daniel Tabbush emphasized that a wider concern for the banking sector is trust.
“The apparent problem is a restoration of trust, and to stop the deposit flight, which perhaps this has been partly or wholly addressed by the central bank,” he told CNBC’s “Street Signs Asia.”
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“But what’s tougher will not be simply containing its issues, is de facto how this feeds through to so many interconnected banks, where there are Credit Swiss contracts – where there are derivatives, where there are facilities – which is de facto the subsequent order issue,” he said.
Banks within the Asia-Pacific also pared some earlier losses – Japan’s Topix earlier plunged by greater than 2% and last traded 1.4% lower.
The Commonwealth Bank of Australia pared most of its losses in volatile trading – it traded 0.15% lower after falling as much as 1.97% earlier. Westpac Banking and National Australia Bank fell as much as 2.35% and 1.81% respectively before erasing some declines. They were last down 1.34% and 0.58% lower, respectively.
Some South Korean banks also fell as much as 2% earlier before partially reversing declines.
The Swiss franc remained volatile following the announcement, strengthening 0.17% to 0.9315 against the U.S. dollar. The Japanese yen also strengthened further to trade at 132.86 against the greenback.
Earlier this week, Credit Suisse chairman Axel Lehmann told CNBC’s Hadley Gamble that the recent collapse of Silicon Valley Bank is “local and contained.”
When asked if he would rule out some sort of government assistance in the longer term, Lehmann said, “We’re regulated, now we have strong capital ratios, very strong balance sheet. We’re all hands on deck. In order that’s not the subject in anyway.”
– CNBC’s Lim Hui Jie contributed to this report.
