PBOC takes action again! Swiss National Bank rescues Swiss credit crisis, providing over $50 billion in emergency funds

The stock price of the investment bank Credit Suisse took a heavy hit after the Silicon Valley bank incident, and later plummeted due to negative news about internal control deficiencies, leading to a temporary halt in trading. Yesterday, its largest shareholder, the Saudi National Bank, also announced a halt in support due to regulatory concerns. However, in the midst of Credit Suisse's crisis, the Swiss National Bank chose to intervene to alleviate liquidity concerns.

Swiss Credit Facing Crisis, Central Bank Steps in to Help

According to an announcement from the Swiss Financial Market Supervisory Authority FINMA, FINMA and the Swiss National Bank SNB stated that issues in certain U.S. banks will not pose a contagion risk to the Swiss financial market, as the strict capital and liquidity requirements of Swiss financial institutions ensure their stability. Additionally, the Swiss central bank also guaranteed that it will provide liquidity to Swiss Credit if needed.

Swiss Credit Utilizing 50 Billion Swiss Francs Lifeline from Central Bank

Furthermore, according to a report from the Wall Street Journal, Swiss Credit stated that it will exercise its right to borrow up to 50 billion Swiss francs, approximately 53.7 billion U.S. dollars, from the Swiss central bank to alleviate liquidity concerns. Swiss Credit referred to this decision as a "decisive action to proactively strengthen liquidity."

Moreover, Swiss Credit plans to utilize the current lower bond prices to conduct a Tender Offer to repurchase some bonds to reduce interest expenses. These bonds include 2.5 billion U.S. dollars of 10 U.S. dollar-denominated senior bonds and 500 million euros, approximately 5.29 billion U.S. dollars, of four euro-denominated senior bonds.

After the crisis, Swiss Credit's stock price plummeted by approximately 35% in just five days, with a price of 1.7 U.S. dollars at the time of writing. According to Reuters' chart, Swiss Credit's stock price has been declining steadily since 2021 due to multiple incidents, dropping by about 85% from its original high of 12 U.S. dollars.