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Credit Suisse stock jumped more than 30% at the outset in Zurich on Thursday, after the ailing lender’s receipt of a 50-billion-franc rescue line from the Swiss National Bank.
Credit Suisse shares in Zurich were up 33% at CHF 2.25 (CHF 1 = $1.0811) at 04:15 ET (08:15 GMT).
The action reverses the stock’s record slump on Wednesday, when Saudi National Bank, the company’s largest stakeholder, stated it would not invest any further money.
Saudi National Bank head Ammar Al Khudairy rowed back his words later, assuring CNBC that “Everything is good. I don’t believe they’ll want further funding.”
In a statement issued overnight, the SNB and its regulator, FINMA, stated that Credit Suisse satisfied all of the essential capital and liquidity rules for systemically significant banks.
They said that there was consequently no risk of contagion to Credit Suisse from the volatility in the U.S. banking system, where three smaller lenders collapsed in the space of a week.
In addition to the CHF 50B Covered Loan Facility, Credit Suisse also said it will buy back up to $2.5B and €500M (€1 = $1.0622) of bonds issued by its various operating companies. These have been aggressively sold in recent days and trade at a significant discount to face value. Buying them back at the current distressed rates and then retiring the bonds will generate an immediate profit for the bank, improving the bank’s capital position.
Credit Suisse said earlier this month that it expects to lose money in both its investment bank and its key wealth management division in the first quarter of this year, as it accelerates a thorough restructuring. It has lost some $9B over the past two years, wiping out all the profits made in the previous decade.
The Swiss bank has long been designated by global regulators as one of the world’s Systemically Important Banks, a so-called G-SIB. That means that it has to hold more capital and more liquid assets than institutions such as Silicon Valley Bank, Signature Bank or Silvergate Capital, all of which failed last week.
