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Credit Suisse secures £44.5bn lifeline amid fears of global financial crisis

Credit Suisse announced that it will borrow 50 billion Swiss francs (PS44.5bn), from the Swiss central banking to strengthen its liquidity.

After fears of a global financial crise intensified by a drop in shares, the bank stated that it was taking “decisive action to pre-emptively reinforce its liquidity”.

Credit Suisse stated in a statement that the additional liquidity would be used to support Credit Suisse’s core business and clients. Credit Suisse also took steps to make Credit Suisse a more focused and simpler bank, built around client needs.

Credit Suisse, Switzerland’s second-largest lender, was the first global bank to receive such a rescue since 2008. However, central banks extend liquidity more broadly to banks in times of market stress, such as the coronavirus pandemic.


After the Swiss National Bank, the Swiss Financial Markets Regulator and the Swiss National Bank promised that emergency funding would be made available in case of need, it happened.

The central bank assured Credit Suisse that it met the “capital and liquidity requirements” imposed on systemically significant banks.

Read more:FTSE 100 takes PS75bn hit in Silicon Valley Bank fallout

What the SVB chaos means for us and the rocky months ahead

SVB UK’s Inside Story

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Why did the market fall on budget day

Shares drop by as much as 30%

Credit Suisse rattled the markets Wednesday when it announced that it had discovered “material weaknesses” within its financial reporting processes for 2021-2022.

After the largest shareholder, Saudi National Bank, stated that it would not provide any additional financial assistance due to rules that prevent it from increasing its equity stake beyond 10%, it saw it drop to 30%.

This caused an automatic halt in trading Credit Suisse shares on Swiss markets and tanked shares other European banks, some by double digits.

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Concerns regarding the banking sector

After suffering its worst points-based fall since the beginning of the crisis, the FTSE saw its combined market value drop to PS75bn by Wednesday’s close.

Credit Suisse Chairman Axel Lehmann spoke at a conference in Riyadh, Saudi Arabia, on Wednesday. He said that the bank had already taken the necessary precautions to reduce the risks.

When asked if government assistance would be eliminated in the future, he answered: “That’s not an issue… We are regulated.” We have strong capital ratios and a very strong balance sheet. It’s all hands on deck so it’s not even a topic.

Credit Suisse faced many crises in the recent years. from a corporate surveillance scandal, losses due to Greensill Capital’s collapse as a supply chain finance company, and Archegos Capital’s collapse as a hedge fund manager.

According to Tuesday’s annual report, customer deposits decreased 41% last year (159.6 billion Swiss francs or PS142bn) compared with the previous year.

After the collapse of Signature Bank and Silicon Valley Bank, two US mid-sized firms, there are now more concerns about the wider banking sector.


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