European bank, which faces crisis, said it “is taking decisive measures to preventively strengthen its liquidity”
The European bank Credit Suisse announced on Wednesday (15.Mar.2023) that it should take a loan from the Swiss Central Bank of $54 billion (approximately CHF 50 billion) through a covered loan facility and a short-term liquidity facility. The announcement comes after, on March 14, the bank presented a financial statement with “weaknesses”
“Credit Suisse is taking decisive measures to preemptively strengthen its liquidity”, the bank said in a statement. Here’s the full (140 KB).
According to the note, the additional liquidity of the loan “would support Credit Suisse’s core businesses and customers, as Credit Suisse takes the necessary steps to create a simpler bank focused on customer needs”.
This Wednesday (March 15), the Swiss Central Bank stated that it will provide liquidity support to Credit Suisse, if necessary.
In addition, through the statement, Credit Suisse:
- informed that it will repurchase senior debt securities for around 3 billion Swiss francs;
- made an all-cash tender on US$10 of senior bond-denominated debt for an aggregate consideration of up to $2.5 billion; It is
- made a public offering relating to 4 euro-denominated senior debt securities for an aggregate amount of up to 500 million euros.
He stated that the last two offers “are subject to various conditions established in the respective tender offer memoranda” and will expire on March 22, 2023.
“These steps demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to add value to our customers and other stakeholders”said the CEO (Chief Executive Officerin English) of the bank, Ulrich Koerner.
Understand the CASE
On Tuesday (March 14), Credit Suisse Group AG reported having identified “material weaknesses” in your financial reports for the past 2 years. The announcement was made in the 2022 annual report. full of the report (762 KB, in English).
The case of the European bank Credit Suisse and the consequences of the bankruptcy of 2 North American banks caused turmoil in the financial market.
Shares in Credit Suisse fell as much as 30.8% at the day’s low and drove the global banking sector down. In Brazil, the 5 main financial institutions on the B3 (São Paulo Stock Exchange) lost BRL 35.7 billion in market value in 4 trading sessions from March 8 to 14.
Hours later, the Financial Times reported that investment bank executives held meetings with representatives of the Swiss central bank and Finma. Also according to the British newspaper, Credit Suisse asked the monetary authorities for a public statement of support.
The Swiss central bank and Finma said in the statement that “the problems of certain banks in the US do not pose a direct risk of contagion to Swiss financial markets”.
The monetary authorities also reinforced that the retreat of Credit Suisse shares has been “affected by market reactions in recent days”. In recent days, SVB (Silicon Valley Bank) and Signature Bank in the United States have announced bankruptcy.
The collapse of SVB began on March 8, 2023, when the bank reported that it had recorded a loss of US$ 1.8 billion (R$ 9.9 billion) in the 1st quarter of 2023 by liquidating US$ 21 billion in securities (R$ 9.9 billion). $109 billion). The financial institution also said it planned to sell US$ 1.7 billion (R$ 8.8 billion) in shares.
The disclosures signaled that financial losses would bankrupt the company. The announcements also raised eyebrows among other investors. The result was a classic customer scramble to get the money out of the bank as quickly as possible. However, part of the withdrawn amount was invested in other, less liquid assets.
On March 10, 2023, the California Department of Financial Protection and Innovation announced the closure of SVB. The bank’s operations were taken over by FCDI (US Federal Credit Assurance Corporation).
In a statement, the agency said it had created the Deposit Insurance National Bank of Santa Clara, a monetary fund into which the money of all policyholders of the bank will be transferred.
On March 12, 2023, just 2 days after SVB went bankrupt, US regulators announced the closure of Signature Bank. Headquartered in New York, the bank is one of the most important in the cryptocurrency market.
Read too:
#Credit #Suisse #borrow #billion #Swiss #central #bank