Group AG, the Swiss bank whose shares tumbled Wednesday as fears about the health of global banks jumped the Atlantic Ocean, said it would exercise its option to raise as much as 50 billion Swiss francs, equivalent to $53.7 billion, from the Swiss National Bank in a bid to stanch liquidity concerns.
The firm, based in Zurich, called the decision a “decisive action to pre-emptively strengthen its liquidity.”
Credit Suisse added that the move “would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs.”
Investors will be closely watching the reaction when Europe reopens for trading Thursday morning, following another day in markets dominated by concerns that global banking problems may be on the verge of bringing the economic expansion to an end.
Credit Suisse also said it would buy back some debt securities in a bid to reduce interest expense and take advantage of the depressed prices of many of its bonds. The firm said tender offers would cover 10 senior U.S. dollar bonds worth $2.5 billion and four senior euro bonds worth 500 million euros, or about $529 million.
The firm billed the borrowing and debt tenders as “ decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.”
The firm’s market meltdown Wednesday prompted European Central Bank officials to call banks it supervises to ask about their exposure to the bank, The Wall Street Journal reported. Investor fears about contagion drove a market rout that wiped out nearly $75 billion in the value of European bank stocks, according to an analysis by Dow Jones Market Data.
CEO
Ulrich Koerner
said Wednesday night, “My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
Seeking to set itself apart from
Financial Corp., the parent of Silicon Valley Bank, which failed last week following the flight of a quarter of its deposit base in a single day, Credit Suisse said it “is conservatively positioned against interest rate risks.”
Unlike SVB, which held a large, largely unhedged portfolio of long-term bonds whose market value was decimated by rising interest rates, Credit Suisse said its “volume of duration fixed income securities is not material” relative to its holdings of high-quality liquid assets such as Treasurys and German bunds. The bank said it “is fully hedged for moves in interest rates.”
Fears of deposit flight continue to vex U.S. regional banks, many of whose shares declined again Wednesday.
Write to Colin Barr at colin.barr@wsj.com
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