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By Joshua Kirby
Shares in Credit Suisse Group AG recovered significantly in early trade Thursday after it said it would turn to the country’s central bank for an injection of up to 50 billion Swiss francs, or some $53.7 billion, following liquidity concerns that had rocked the lender and spooked the wider banking sector.
At 0827 GMT, shares were up 23% at CHF2.08, rallying after plumbing record lows earlier in the week. The share price still remains more than 7% below Monday’s closing price of CHF2.26.
Credit Suisse said in the early hours of Thursday that it would ask the Swiss National Bank for the loan, under a short-term liquidity facility, and that it would also buy back senior debt securities in cash for up to around CHF3 billion. This will allow it to reduce interest expense, and to take advantage of the bonds’ current low prices, Credit Suisse said.
The measures demonstrate "decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders," Chief Executive Ulrich Koerner said.
The stronger liquidity position is positive news for Credit Suisse, RBC Capital Markets analyst Anke Reingen said in a note following the news.
"Regaining trust is key for Credit Suisse shares," she said.
Other European banks also rose following Credit Suisse’s loan news, which should provide some comfort that a spillover to the banking sector can be contained, Ms Reingen. said. The situation nevertheless remains uncertain, she said.
The lender’s crash had earlier prompted European Central Bank officials to call banks it supervises to ask about their exposure to Credit Suisse, The Wall Street Journal reported.
Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby
(END) Dow Jones Newswires
March 16, 2023 04:47 ET (08:47 GMT)
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