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Credit Suisse sheds another 8% as traders digest emergency liquidity

The shares of Credit Suisse fell 8% on Friday after soaring during the previous session as the embattled lender announced it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank. This week’s intervention by Swiss authorities reaffirmed that Credit Suisse met the capital and liquidity requirements imposed on “systemically important banks,” prompting shares to jump more than 18% on Thursday after closing at an all-time low on Wednesday. Credit Suisse also offered to buy back around 3 billion francs’ worth of debt, relating to 10 U.S. dollar-denominated senior debt securities and four euro-denominated senior debt securities. After top investor Saudi National Bank revealed it would not provide the bank with any additional cash due to regulatory requirements, Credit Suisse’s share price began to decline on Wednesday after financial reporting concerns led to the delay of its annual results. The bank’s Swiss-listed shares ended the week down 25.5%.
After a litany of losses and scandals, the bank is undergoing a massive strategic overhaul to restore stability and profitability. The restructure includes the spin-off of the investment bank into U.S.-based CS First Boston, a sharp reduction in exposure to risk-weighted assets, and a $4.2 billion capital raise, partly funded by a 9.9% stake acquired by the Saudi National Bank. However, capital markets and stakeholders appear unconvinced. The share price has fallen sharply over the last year, and Credit Suisse has seen huge outflows in assets under management, losing around 38% of its deposits in the fourth quarter of 2022. Credit default swaps, which insure bondholders against a company defaulting, soared to new record highs this week.

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