Credit Suisse to borrow billions from Swiss central bank

Credit Suisse has announced that it will borrow up to $54 billion from the Swiss central bank to improve its liquidity after its shares plunged, dragging down other major European lenders in the wake of bank failures in the United States.The troubled lender will borrow from a liquidity facility and is making a tender offer to buy back up to three billion francs of dollar- and euro-denominated debt. Credit Suisse is also accessing a “short-term liquidity facility”.

The bank’s shares tumbled 24 percent on the SIX Swiss Exchange, hitting a new low, and the price of its bonds dropped sharply as well. The cost of financial contracts that insure against a default by the bank spiked to their highest levels on record.

After European markets closed on Wednesday, the Swiss National Bank and Finma, the country’s financial regulator, issued a joint statement certifying Credit Suisse’s financial health and saying the central bank would backstop the bank if needed.Credit Suisse’s announcement comes amid broader banking sector fears sparked by last week’s collapse of Silicon Valley Bank (SIVB.O) and Signature Bank, two U.S. mid-size firms. Investor focus is also on any action by central banks and other regulators elsewhere to restore confidence in the banking system as well as any exposure businesses may have to Credit Suisse.

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