Credit Suisse has announced plans to take out a loan of up to 50 billion francs ($54 billion) from the Swiss central bank to strengthen its finances.
The financial institution is currently focusing its efforts on strengthening liquidity to become a simpler bank. On Wednesday, March 15, the value of Credit Suisse shares showed a drop of 24%. This happened after the so-called weaknesses were discovered in the financial statements of the giant of the Swiss banking sector.
In European markets, the news about reporting problems provoked a sell-off in shares of the financial institution due to the fear of a global crisis.
Credit Suisse says that the borrowing measures are a demonstration of determination in strengthening its own. The bank’s executive director Ulrich Kerner says that now the primary goal is to move forward so that the financial institution transforms into a simpler representative of the banking sector and focuses on meeting the needs of customers.
After the fall in the value of Credit Suisse shares, the National Bank of Saudi Arabia, which is an investor in the Swiss bank, announced that there were no plans to inject additional funds. This position of the lender has aggravated the difficult situation in the financial markets.
Andrew Kenningham of Capital Economics says that the problems of Credit Suisse actualize the question of whether the current situation in the banking sector is a temporary state of affairs or whether it portends a large-scale crisis. Earlier it became known about the bankruptcy of financial institutions in the United States.
The Swiss National Bank and the Swiss Financial Markets Supervision Authority have declared their readiness to help Credit Suisse if necessary. Thus, these institutions tried to reduce the panic in the markets. The regulators noted that Credit Suisse complies with the stability rules that apply to systemically important banks in Switzerland.
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