Credit Suisse emergency loan sparks banking fears
Credit Suisse announced that it will be borrowing up to 50 billion Swiss francs (£44.5bn) from Switzerland’s central bank to bolster its finances, in an effort to simplify and strengthen its business.
The troubled bank’s shares plummeted by 24% on Wednesday after revealing weaknesses in its financial reporting, sparking concerns of a wider banking crisis and leading to steep drops in Asian shares.
However, European markets are expected to open higher on Thursday.
The Bank of England has reportedly been in contact with Credit Suisse and Swiss authorities to monitor the situation.
The Swiss National Bank has assured that the bank has the necessary funds but is ready to step in if necessary.
Last week, the US saw the collapse of Silicon Valley Bank and New York’s Signature Bank. The US central bank had to intervene to prevent a run on bank deposits as panic spread.
Former deputy governor of the Bank of England, Sir John Gieve, believes that central banks are sending a message that such problems will be contained locally. He believes that in the case of Credit Suisse, the Swiss central bank’s intervention will prevent the crisis from spreading.
While Asian markets have been impacted, the banking fears have not yet spread widely to the region.
Credit Suisse has had a series of scandals in recent years, including charges of money laundering, spying allegations, and high profile departures.