It’s been a tough eight months for Credit Suisse’s CEO Ulrich Körner, who took over the reins in August 2022 from Thomas Gottstein after just two years at the helm. And things have taken a turn for the worse, as the market turmoil in the wake of Silicon Valley Bank’s collapse added fuel to the lender’s fires.
As a result, the Swiss bank has been forced to turn to the country’s central bank to help shore up its balance sheet in a move it termed “taking decisive action to pre-emptively strengthen its liquidity”.
The Swiss National Bank (SNB) has stepped in with a SFr50bn ($54bn) covered loan facility as well as a short-term liquidity facility, which are fully collateralised by “high-quality assets”, according to Credit Suisse.
The bank has also embarked on a debt buy-back programme, making a cash tender offer in relation to 10 US dollar-denominated senior debt securities for an aggregate consideration of up to $2.5bn. It is also announcing a separate cash tender offer in relation to four euro-denominated senior debt securities for an aggregate consideration of up to €500m. The offers will expire on March 22.
Mr Körner stated: “These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.” He went on to acknowledge the Swiss Financial Market Supervisory Authority and SNB’s support.
In a joint statement on March 15, the Swiss authorities were clear that SNB would provide liquidity to Credit Suisse, if necessary, to help alleviate worries in the market that the beleaguered bank might fail. In addition, they emphasised that Credit Suisse meets the required capital, funding, liquidity and leverage levels of a global systemically important bank.
Data from The Banker Database illustrates the haemorrhaging of Credit Suisse’s assets and deposits over the past two years. While it saw a slight increase in both due to Covid-19 support in 2020, total assets fell 9.3% in 2021 and by another 30.5% in 2022, to $577.6bn. Likewise, total deposits fell by 41.4% in 2022, to $266.5bn.
In comparison, Swiss rival UBS saw assets and deposits contract by 1.2% and 3.3%, respectively, in 2022.
