The shares of Credit Suisse jumped Thursday after it announced it would borrow up to $54 billion from Switzerland’s central bank, an emergency step designed to bolster investor confidence.
Stock markets fell in the U.S. and around the world on Wednesday after Credit Suisse shares dropped amid rising concerns about the stability of the global banking system following the rescue of Silicon Valley Bank and Signature Bank on Sunday.
The European bank, however, had already been reeling after a succession of scandals and poor decisions that several CEOs failed to address over several years prior to the collapse of the two U.S. lenders.
The lender experienced some setbacks, including a potential issue with its financial reporting last year and a drop in shares when Saudi National Bank’s chairman announced they would not be increasing their investment. However, Credit Suisse received temporary relief by announcing plans to borrow up to 50 billion Swiss francs from the Swiss National Bank after receiving assurance of support if necessary.
Banks around the world remain cautious
Credit Suisse’s woes come as the failures of Silicon Valley Bank and Signature Bank have raised concerns about the financial health of the U.S. banking system despite assurances from President Biden and administration officials.
U.S. Treasury Secretary janet Yellen will testify before the Senate Finance Committee later on Thursday and is set to say the U.S. banking system is “sound” and to assure depositors their money is safe, according to prepared remarks.
Credit Suisse’s plunge on Wednesday sparked fears that concerns about the U.S. financial system were spreading to other parts of the world.
Although Credit Suisse’s shares are trading at a fraction of where they once were, it’s still considered one of just a select number of banks that are considered to be important to the global financial system given its worldwide presence and its deep involvement in international trading.
