Credit Suisse thrown $54bn lifeline to ward off global banking crisis

● Credit Suisse will borrow up to $54bn (about R994bn) from Switzerland’s central bank to shore up liquidity and investor confidence after a slump in its shares intensified fears about a global banking crisis.

The bank’s announcement on Thursday, which came in the middle of the night in Zurich, prompted a 24% rise in Credit Suisse shares and helped reverse some of the heavy losses on stock markets driven by investor fears over potential bank runs across the world.

Credit Suisse, Switzerland’s second-largest bank, is the first major global bank to be thrown an emergency lifeline since the 2008 financial crisis and its troubles have raised doubts over whether central banks will be able to sustain their fight against inflation with aggressive interest rate hikes.

The bank’s loan announcement followed assurances from Swiss authorities that Credit Suisse met “the capital and liquidity requirements imposed on systemically important banks” and that it could access central bank liquidity if needed.

JPMorgan analysts said the measures will buy the Swiss lender time to carry out its restructuring.

The 167-year-old bank’s problems have shifted the focus for investors and regulators from the US to Europe, where Credit Suisse led a sell-off in bank shares after its largest investor said it could not provide more financial assistance because of regulatory constraints.

The concerns about Credit Suisse added to broader banking sector fears sparked by last week’s collapse of Silicon Valley Bank and Signature Bank, two US mid-size firms.