Crisis-hit Credit Suisse has been struggling and facing extreme volatility amid doubts over its financial stability.....until the Swiss central bank stepped in, throwing the bank a massive $54 billion lifeline.
In a statement on Thursday (16th March), Credit Suisse said it is "taking decisive action to pre-emptively strengthen its liquidity by intending to exercise its option to borrow from the Swiss National 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."
On Wednesday, shares of Credit Suisse plummeted to a new all-time low over worries about a contagion effect of the U.S banking crisis.
To calm fears, the Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank issued a joint statement. The statement said that the U.S banking crisis did not pose a direct contagion risk for the Swiss financial markets. Specifically, on Credit Suisse, the statement said that the bank meets the capital and liquidity requirements and that if necessary, SNB would provide CS with liquidity.
Following the lifeline that was thrown to Credit Suisse, shares of other major European banks, which had also plunged on Wednesday, saw a strong recovery on Thursday.