Will make liquidity available to Credit Suisse if required, says Swiss central bank

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The Swiss central bank on Wednesday said that the embattled Credit Suisse’s capital and liquidity levels were adequate but emphasised that it is prepared to make liquidity available to the bank if required.

The announcement was made after shares of the second-biggest bank in Switzerland nosedived to historic lows as its main shareholder declined to invest any money in the institution.

“Credit Suisse meets the higher capital and liquidity requirements applicable to systemically important banks,” said the Swiss National Bank (SNB) and Swiss financial regulator Finma, in a joint statement.

Liquidity will be provided by the SNB to Credit Suisse “if necessary”, the statement further read, as the turbulent day came to an end during which the market value of the bank fell below $7 billion.

Credit Suisse’s share price fell sharply after Saudi National Bank chairman Ammar al-Khudairy said that it would “absolutely not” up its stake.

The market value of Credit Suisse had already received a heavy blow this week amid fears of contagion from the fall of two major banks in the US and its annual report stating “material weaknesses” in internal controls.

The shares of the bank went for a freefall on the Swiss stock exchange, declining more than 30 per cent to hit a record low of 1.55 Swiss francs. By the end of the day’s trading, the bank was able to regain some ground as its shares closed at 1.697 Swiss francs, declining by 24.24 per cent.

WATCH | Financial shares fall as Credit Suisse becomes latest crisis for the sector

Amid the panic in the market, Credit Suisse chairman Axel Lehmann, speaking at the Financial Sector Conference in Saudi Arabia, said no assistance is needed by the government, saying it “isn’t a topic”.

“We have strong capital ratios, a strong balance sheet. We already took the medicine,” said Lehmann, referring to the drastic restructuring plan of the bank revealed in October.

(With inputs from agencies)

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