Credit Suisse shares soar after central bank aid announced

They plunged 30pc on SIX stock exchange after its biggest shareholder said it would not put more money into it

Credit Suisse’s shares soared 30% on Thursday after it announced it will move to shore up its finances by borrowing up to nearly $54 billion from the Swiss central bank, bolstering confidence as fears about the banking system moved from the U.S. to Europe.

It was a massive swing from a day earlier, when shares of Switzerland’s second-largest commercial bank plunged 30% on the SIX stock exchange after its biggest shareholder said it would not put more money into Credit Suisse. That dragged down other European banks after collapse of some U.S. banks stirred fears about the health of global banks. Shares of France’s Societe Generale SA and BNP Paribas as well as Germany’s Deutsche Bank and Britain’s Barclays Bank were up Thursday after big drops a day earlier.

Credit Suisse, which was beset by problems long before the U.S. bank failures, said Thursday that it would exercise an option to borrow up to 50 billion francs ($53.7 billion) from the Swiss National Bank. The banking turmoil has cast a shadow over Thursday’s meeting of the European Central Bank. Before the chaos erupted, ECB head Christine Lagarde had said it was “very likely” that the bank would make a large, half-percentage point rate increase to tackle stubbornly high inflation.

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Switzerland’s central bank announced late Wednesday it would support Credit Suisse if needed. Credit Suisse is “a much bigger concern for the global economy” than the midsize U.S. banks that collapsed, said Andrew Kenningham, chief Europe economist for Capital Economics. It has multiple subsidiaries outside Switzerland and handles trading for hedge funds. “Credit Suisse is not just a Swiss problem but a global one,” he said. He noted, however, that the bank’s “problems were well known so do not come as a complete shock to either investors or policymakers.”

50 bn francs
What Credit Suisse may borrow

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