AP: Credit Suisse shares soar after central bank offers lifeline

Photo: Reuters (Fair Use)

On Thursday, the shares of Credit Suisse experienced a surge in value as the Swiss central bank announced its decision to provide the bank with a loan of up to 50 billion francs ($54 billion).

This move was intended to restore confidence in the second-largest bank in Switzerland, following the bankruptcy of two U.S. banks, the Associated Press reported.

Credit Suisse made the announcement about the loan prior to the opening of the Swiss stock market, causing the shares to surge by as much as 33%.

However, by late afternoon trading, the gain had stabilized at around 17%, with shares valued at 2 francs ($2.15). This represented a significant rebound from the previous day, when news that the bank’s largest shareholder would not be providing additional funding caused a 30% drop in Credit Suisse’s share price.

This decline had a ripple effect on other European banks and heightened fears regarding the stability of the global financial system. On Thursday, stocks in European banks experienced a modest increase as well, as reported by the AP.

On Wednesday, the Swiss National Bank announced that it was willing to support Credit Suisse, as the bank meets the more stringent financial regulations imposed on “systemically important banks.”

The Swiss National Bank also stated that the issues faced by some U.S. banks do not pose a direct risk of contagion to Switzerland.

Credit Suisse, which had already been grappling with issues prior to the U.S. bank failures, announced that the loan provided by the central bank would allow the bank the necessary time to carry out a reorganization plan aimed at establishing a “simpler and more focused bank.”

Written by staff