Swiss Central Bank does not rule out support for Credit Suisse

After the collapse of the American SVB, Signature Bank and Silvergate Capital, Credit Suisse shares collapsed by a record 30.8%.Swiss regulators expressed readiness to provide the bank with liquidity if necessary

Switzerland's central bank will provide the country's second-largest bank, Credit Suisse, with liquidity if needed, Reuters reports, citing a statement by financial regulator FINMA and the Swiss central bank.

Regulators believe that, despite the "concerns" around Credit Suisse, the bank "meets the capital and liquidity requirements for systemically important banks", so if necessary, it will be provided with additional support. “There were no signs of direct risk to Swiss institutions due to turmoil in the US banking market,” FINMA and the Central Bank said.

After a record drop in Credit Suisse shares, at least one foreign government and one major bank put pressure on Swiss regulators to provide liquidity, Reuters sources say.

Credit Suisse welcomed the statement of the Swiss Central Bank and FINMA. “We welcome the statement of support made by the Swiss National Bank and financial market watchdog FINMA,” the bank said on Twitter.

Switzerland's second largest bank found itself in a difficult position after the collapse of the American Silicon Valley Bank, Signature Bank and Silvergate Capital. Shares of Credit Suisse on the Swiss Stock Exchange (SIX) on Wednesday, March 15, updated a historical low. Quotes collapsed by 30.8% to 1.55 Swiss francs, which was the strongest drop in one day. As a result of trading on March 15, the fall was 24.2%, to 1.7 Swiss francs.

In addition to the situation with American banks, the decline in quotations was facilitated by the refusal of the largest shareholder of Credit Suisse - Saudi National Bank - to buy back more of the bank's shares. They said they would not buy back more shares so as not to violate regulatory requirements, writes Reuters. “We can’t because otherwise we will exceed the 10% threshold,” said Ammar Al-Khudayri, Chairman of the Board of Directors of Saudi National Bank.

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After that, Credit Suisse turned to the Swiss National Bank (SNB) for support, the Financial Times reported, citing sources. According to the publication, Credit Suisse asked the SNB to issue an "encouraging statement on the financial health" of the bank. With a similar request, the credit institution addressed the Swiss Financial Market Supervisory Authority (FINMA).

Credit Suisse is the second largest bank in Switzerland, which has been operating on the market since 1856. In addition to serving clients in Switzerland, he provides investment banking services and works with wealthy clients in many countries around the world. Over the past few years, the company has experienced a series of upheavals, scandals, management changes and legal problems.

In the last three months of 2022, customers have withdrawn about $120 billion in assets from Credit Suisse. According to Bloomberg, the bank's 2022 loss of CHF 7.3 billion wiped out profits from the previous decade.