Swiss lender, Credit Suisse, races to borrow $53.7bn amid fear of financial struggle

Switzerland lender, Credit Suisse, has disclosed its intention to borrow 50 billion Swiss Francs ($53.7 billion) from the Swiss National Bank amid global fear of a meltdown in the international financial market.

On Thursday, Credit Suisse said it decided to exercise its right under the Swiss National Bank’s Covered Loan Facility by obtaining the $53.7 billion loan to boost its liquidity levels to finance its core businesses and clients’ needs.

The announcement to obtain a loan comes after the largest investor in Credit Suisse, Saudi National Bank (SNB), said it will not be providing more cash to the Swiss lender should it need it.

Ripples Nigeria previously reported that Saudi National Bank (SNB) also stated that it doesn’t believe Credit Suisse needs extra money for its operation, as the firm has a strong capital base.

Following the comment, equity investors sold off Credit Suisse’s shares in fear that the firm might be experiencing its own financial crisis – that led to two U.S. banks; Silicon Valley Bank and Signature Bank to go into insolvency – and there will be no financial backing to save it.

To shore up investors’ confidence, Credit Suisse said it has a strong balance sheet, while Swiss National Bank assured that should Credit Suisse need financial assistance, the country’s financial regulator will bail out the firm.

In a statement released by the firm, Credit Suisse said, “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.

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“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.”

Also, Credit Suisse announced a plan of 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.

The company wrote that: “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,”

Speaking on the capital strategy, Credit Suisse Chief Executive Officer, 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.”

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