By Mark McSherry
Credit Suisse said on Thursday it will borrow up to $54 billion from Switzerland’s central bank to shore up liquidity and investor confidence — and help soothe fears of a global banking crisis.
Switzerland’s second-largest bank said it would exercise an option to borrow up to 50 billion Swiss francs ($54 billion) from the central bank.
Scandal-plagued Credit Suisse also said it will buy back about 3 billion Swiss francs of its debt.
The moves followed assurances from Swiss authorities that Credit Suisse met “the capital and liquidity requirements imposed on systemically important banks” and that it could access central bank liquidity.
JP Morgan analysts said the may buy Credit Suisse time to carry out its restructuring.
“The combination of measures should be sufficient to stem the negative moves across the capital structure as the market priced in the potential impact of liquidity pressures,” wrote JP Morgan analysts.
But one JPMorgan analyst, Kian Abouhossein, wrote: “We see a resolution scenario as most unlikely in our view and more likely an intervention with the . . . option of a takeover as the most likely scenario especially by UBS.”
Credit Suisse said in a statement: “Credit Suisse is taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow from the Swiss National Bank (SNB) up to CHF 50 billion under a Covered Loan Facility as well as a short-term liquidity facility, which are fully collateralized by high quality assets.
“Credit Suisse also announces offers by Credit Suisse International to repurchase certain OpCo senior debt securities for cash of up to approximately CHF 3 billion.
“Credit Suisse announces its intention to access the SNB’s Covered Loan Facility as well as a short-term liquidity facility of up to approximately CHF 50 billion in aggregate.
“This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.
“Credit Suisse also announces today that it is making a cash tender offer in relation to ten US dollar denominated senior debt securities for an aggregate consideration of up to USD 2.5 billion.
“Concurrently, Credit Suisse is also announcing a separate cash tender offer in relation to four Euro denominated senior debt securities for an aggregate consideration of up to EUR 500 million. Both offers are subject to various conditions as set out in the respective tender offer memoranda.
“The offers will expire on March 22, 2023, subject to the terms and conditions set out in the offer documents. The transactions are consistent with our proactive approach to managing our overall liability composition and optimizing interest expense and allow us to take advantage of current trading levels to repurchase debt at attractive prices.”
Credit Suisse CEO 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.”