Credit Suisse gets $54 bln lifeline, shares soar
STORY: Credit Suisse has taken a lifeline from the Swiss central bank in a bid to calm the concerns for its survival which had roiled global markets.
It’s borrowing up to $54 billion to shore up its finances and restore investor confidence.
In a statement early Thursday (March 16) the bank said it had taken “decisive action to pre-emptively strengthen liquidity”.
The move comes a day after shares in the bank collapsed.
It’s been battered by a string of scandals, and has seen huge outflows of capital.
That all came to a head this week amid wider investor concerns over the banking sector following the collapse of Silicon Valley Bank and other U.S. lenders.
Though the cases are unrelated, some see shared root causes.
Gary Ng is senior economist at Natixis:
"So I think this event of SVB and also the Credit Suisse really reflect what is happening in the financial sector - is that we start to see it more after-effect of the high interest rate. Of course, we cannot say the root causes of the two cases are the same, because at the end of the day, the business models may be different, but they share the similarities that there are problems in the corporate governance.”
Concern over Credit Suisse far outweighed worries over SVB.
It’s a major global bank, meaning its collapse would be felt worldwide.
Now it’s the first such lender to get an emergency lifeline since the 2008 global financial crisis.
The move boosted shares early on in Europe.
Credit Suisse stock jumped over 20%.
The EuroSTOXX banking index was up around 2%.
But concern over the banking sector has far from gone away, with lenders around the world assessing their own financial health.
Investors remain on edge, waiting to see if another one is in trouble.