Credit Suisse Borrows $54 Billion from Swiss National Bank Days After Revealing Material Weakness

Credit Suisse (NYSE:CS) has taken “decisive action” to buttress its balance sheet by tapping into a CHF 50 billion ($54 billion) loan from the Swiss National Bank. (SNB)

In recent days, shares of Credit Suisse had been hammered by speculation that the bank was in trouble, dealing from global banking concerns. Two days ago, Credit Suisse revealed a “material weakness” that may have led to incorrect account balances in its financial statements and that it had not maintained “an effective risk assessment process.” Not encouraging words.

Yesterday, the Swiss Financial Market Supervisory Authority (FINMA), and SNB, announced it was ready to support Credit Suisse with liquidity if necessary. Today, the bank deemed it necessary.

Credit Suisse said it had exercised its option to borrow money from the central bank under a Covered Loan Facility as well as a short-term liquidity facility, which are 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.

Credit Suisse CEO Ulrich Koerner issued the following comment on the bailout:

“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders. We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”

The bank added that as a systemically important bank, it is subject to high standards of funding and structure.

Credit Suisse added that it has made “significant progress toward this transformation” in pursuit of a “new Credit Suisse.” This includes actions to restructure its investment bank, including the exit from the Securitized Products Group. The bank aims to cut costs by CHF ~2.5 billion by 2025, including CHF ~1.2 billion in 2023.

Credit Suisse shares trading on the NYSE are up slightly in pre-market trading.

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