(MENAFN) Credit Suisse shares surged over 30 percent at market opening on Thursday after the Swiss banking giant announced plans to borrow up to 50 billion francs (around USD54 billion) from the central bank. This move comes after the bank's shares plummeted to a record low on Wednesday, as investors grew increasingly concerned about the spillover effect of the collapse of two US lenders, Silicon Valley Bank and Signature Bank, within days.
In a statement released early Thursday, Credit Suisse said that the additional liquidity would support its core businesses and clients as it takes the necessary steps to create a simpler and more focused bank built around client needs. The Zurich-based bank's shares were traded for 2.25 Swiss francs (USD2.43) at open, up more than 30 percent from Wednesday's close.
The collapse of Silicon Valley Bank and Signature Bank has had a significant impact on the global financial system, and investors are concerned about the potential fallout for other banks. Credit Suisse's announcement that it will borrow from the central bank is aimed at reassuring investors and stabilizing the bank's position. The move is part of a broader effort to address concerns about the health of the banking sector and maintain stability in the financial system.
Credit Suisse's main investor, Saudi National Bank, announced on Wednesday that it was not able to provide more financial assistance to the bank. This news further exacerbated concerns about the bank's financial position and led to a significant drop in its share price. The Saudi National Bank holds nearly 10 percent of Credit Suisse shares.
Credit Suisse's decision to borrow from the central bank is a significant move, as it highlights the challenges facing the banking sector and the need for intervention to maintain stability. The bank is taking steps to create a simpler and more focused business model, which is aimed at improving its financial position and better serving its clients. The success of these efforts will be closely monitored by investors and regulators alike, as they will have a significant impact on the broader financial system.
The surge in Credit Suisse's share price following the announcement of the borrowing plans is a positive development, as it indicates that investors are responding positively to the bank's efforts to address its challenges. The bank will need to continue taking decisive action to address concerns about its financial position and maintain stability in the financial system. The success of these efforts will be critical for the bank and for the broader economy as a whole.
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