Credit Suisse Backed by Swiss Central Bank to Pre-emptively Strengthen Liquidity as It Erupts Into Full-Blown Crisis

Backed by the Swiss National Bank (SNB), Credit Suisse announced today that it is taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow from the Switzerland's central bank 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 announced offers by Credit Suisse International to repurchase certain OpCo senior debt securities for cash of up to approximately CHF 3 billion.

Meanwhile, the bank stated 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. 

Credit Suisse further explained in the announcement: "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's stock exchange value and the value of its debt securities have been particularly affected by the collapse of Silicon Valley Bank in recent days. The Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank SNB pledged on Wednesday to fund Credit Suisse with liquidity "if necessary," to underpin confidence in the bank.

FINMA and SNB said in yesterday's joint statement: "The problems of certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets. The strict capital and liquidity requirements applicable to Swiss financial institutions ensure their stability. Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the SNB will provide CS with liquidity."

As of press time, Credit Suisse shares has plunged 24.24% to CHF 1.55.