(MENAFN- Swissinfo)
After a day of market turmoil, Credit Suisse announced on Wednesday evening that it planned to borrow up to CHF50 billion from the Swiss National Bank. © Keystone / Ennio Leanza
The bank's liquidity is not its fundamental problem, rather its business model is unprofitable.
This content was published on March 17, 2023 March 17, 2023 minutes Owen Walker, European Banking Correspondent, Financial Times The $54 billion (CHF50 billion) lifeline Credit Suisse negotiated from the Swiss central bank on Wednesday night was meant to act as a“circuit breaker” on the stricken lender's woes, according to people involved in the talks.
External Content But by close of play on Thursday, the bank's shares still traded 11% below where they started the day before. The drop in its credit default swaps - a measure of investor bearishness - and bond yields was also minimal.
For investors, the bank's liquidity is not its fundamental problem. Instead they worry its business model is unprofitable - a concern that would be exacerbated if clients continued to pull out assets.
That's why - following the collapse of Silicon Valley Bank and after Credit Suisse's biggest shareholder said it would not be increasing its investment - questions are being asked about the Swiss bank's future.
The options on the table if deposits keep being pulled include tearing up its radical restructuring plan, spinning off its Swiss unit, a full blown takeover or, in a worst-case scenario, the resolution of the bank.
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