Finance Feeds logo

Credit Suisse secures $54bn lifeline from SNB to avoid collapse

Rick Steves

Credit Suisse is offering to buy USD and EUR denominated senior debt securities. Offer will expire on March 22, 2023.

Credit Suisse

Credit Suisse has announced it plans to exercise its option to borrow from the Swiss National Bank (SNB) up to CHF 50 billion ($54 billion) under a Covered Loan Facility as well as a short-term liquidity facility, which are fully collateralized by high quality assets.

The bank also stated that Credit Suisse International offers to repurchase certain OpCo senior debt securities for cash of up to approximately CHF 3 billion.

Credit Suisse will use the $54bn to manage liability composition and optimize interest expense

Credit Suisse CEO Ulrich Koerner said: “These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders. We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”

The announcement has already relieved the financial markets, with its stock shooting back up by 22%, as the additional liquidity would support Credit Suisse’s core businesses and clients in a hard time for highly indebted financial services firms due to rising interest rates.

Credit Suisse is making a cash tender offer in relation to ten US dollar denominated senior debt securities for an aggregate consideration of up to USD 2.5 billion.

The bank is also announcing a separate cash tender offer in relation to four Euro denominated senior debt securities for an aggregate consideration of up to EUR 500 million.

The offers will expire on March 22, 2023 and are consistent with the bank’s proactive approach to managing its overall liability composition and optimizing interest expense.

As of the end of 2022, Credit Suisse had a CET1 ratio of 14.1% and an average liquidity coverage ratio1 (LCR) of 144%, which has since improved to approximately 150% (as of March 14, 2023). The use of the Covered Loan Facility of CHF 39 billion will further strengthen the LCR with immediate effect.

Credit Suisse says it is conservatively positioned against interest rate risks. The volume of duration fixed income securities is not material compared to the overall HQLA (high quality liquid assets) portfolio and, in addition, is fully hedged for moves in interest rates. Moreover, the loan book is highly collateralized at almost 90%, with more than 60% in Switzerland and an average provision for credit loss ratio of 8 bps across Wealth Management and the Swiss Bank.

Subscribe

Read this next

Inside View, Institutional FX

Time for brokers to add options trading as volumes explode on high volatility

“Usually, adding options to the typical CFDs and equities offering leads to fragmentation of the platform technology as many brokers will need additional back-end and front-end components, and that could be an important barrier for them. Apart from that, legal hassle and costs associated with proper licensing of market data could be a barrier at first. We are seeing this trend among market data vendors and exchanges to make it easier and more affordable.”

Metaverse Gaming NFT

GCEX’s DeFi education and prime brokerage offering available in DubaiVerse

“We are excited to be part of the developments of The Sandbox and to join other top players in the region, including our regulator, Dubai’s Virtual Asset Regulatory Authority (VARA), as part of the DubaiVerse. This is a great opportunity to bridge the gap between Web3 early adopters and GCEX clients, building a community around Web3 and digital assets.”

Digital Assets

Circle wants Fed to back USDC stablecoin after “very serious stress test” with collapse of SVB

The collapse of Silicon Valley Bank allegedly proves Circle’s point that there is a need for its USDC stablecoin to be backed by the U.S. Federal Reserve with its U.S. dollars held at the Fed.

Digital Assets

Google searches for Crypto.com and Gate.io exploded by 300% amid FTX collapse

“The findings emphasize the importance of staying on top of market trends and being able to pivot strategies quickly and also offer valuable insights into the current state of the market and the behavior of traders, providing investors with valuable information to make informed decisions about their investments.”

Institutional FX

iS Prime reports £35m turnover, £16.2 million pre-tax profits, £37 cash balances

“We have plans in place to evolve the business over the next year, driving further growth for both iS Prime and for our clients.”

Industry News

Clearwater taps BNP Paribas to combine investment accounting/reporting solutions with custody

“We invite asset owners to explore our powerful, game-changing solution that fully leverages our award-winning technology platform and BNP Paribas’ suite of custody activities. Together with BNP Paribas, we aim to extend this solution to our key core markets.”

Executive Moves

XS.com hires ex-iFX EXPO Andreea Ilies as Global Head of Events

“I believe in 2023, events, trade shows and seminars will be of significant importance in the finance sector as we push forward with a more social and personalized approach to doing business.”

Executive Moves

FlexTrade hires ex-Fidessa Rajiv Shah as Head of Sales EMEA for sell-side OEMS, FlexOMS

“It’s an exciting time to join FlexTrade. From a business perspective, the firm has a demonstrable track record in creating and growing long-standing customer relationships through first-class support and a client-first approach. Alongside this, the advanced capabilities of FlexOMS make it one of the most compelling offerings available within the OEMS space.”

Digital Assets

DWF Labs invests $20 Million in Synthetix, token trading volume triples

Global Web3 venture capital and market maker DWF Labs has pledged an investment of $20 million to spur development in the growing ecosystem of Synthetix, a derivatives liquidity protocol on Ethereum.

<
✖