London: Troubled banking giant Credit Suisse says it will borrow up to $54 billion from the Swiss central bank to shore up its finances.
The lender said it was taking decisive action to strengthen its liquidity as it looked to become a simpler bank, the BBC reported.
Shares in Credit Suisse fell 24 per cent on Wednesday after it said it had found “weakness” in its financial reporting.
This prompted a general sell off on European markets, and fears of a wider financial crisis.
Credit Suisse said its borrowing measures demonstrated “decisive action to strengthen (the bank)”.
“My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs,” Credit Suisse’s chief executive Ulrich Koerner said in a statement.
Problems in the banking sector surfaced in the US last week with the collapse of Silicon Valley Bank, the country’s 16th-largest bank, followed two days later by the collapse of Signature Bank, the BBC reported.
After Credit Suisse shares plunged on Wednesday, a major investor, the Saudi National Bank, said it would not inject further funds into the Swiss lender.
The worries spread across financial markets with all major indexes falling sharply.
“The problems in Credit Suisse once more raise the question whether this is the beginning of a global crisis or just another ‘idiosyncratic’ case,” wrote Andrew Kenningham of Capital Economics.
The Swiss National Bank, which is Switzerland’s central bank, and the Swiss Financial Market Supervisory Authority sought to calm investor fears, saying they were ready to help Credit Suisse if necessary, the BBC reported.
Strict rules apply to Swiss financial institutions to “ensure their stability” and Credit Suisse meets the requirements for banks considered systemically important, the regulators said.
“There are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market,” they said in a joint statement.