Credit Suisse's shares soared more than 30% on Thursday after it announced it will move to shore up its finances by borrowing up to nearly $54 billion from the Swiss central bank, bolstering confidence as fears about the banking system moved from the US to Europe. It was a massive swing from a day earlier, when shares of Switzerland’s second-largest commercial bank plunged 30% on the SIX stock exchange after its biggest shareholder said it would not put more money into the Swiss lender, the AP reports. That dragged down other European banks after the collapse of two US banks stirred fears about the health of global banks. Switzerland’s central bank announced late Wednesday that it was prepared to act, saying it would support Credit Suisse if needed.
Credit Suisse, which was beset by problems long before the US bank failures, said Thursday that it would exercise an option to borrow up to $53.7 billion from the central bank. "This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around client needs," the bank said. Credit Suisse shares hit a record low Wednesday after the Saudi National Bank told news outlets that it would not inject more money into the Swiss lender. The Saudi bank is seeking to avoid regulations that kick in with a stake above 10%, having invested some $1.6 billion to acquire a holding just under that threshold.
A day earlier, Credit Suisse reported that managers had identified "material weaknesses" in the bank’s internal controls on financial reporting as of the end of last year. That fanned new doubts about the bank’s ability to weather the storm. The Swiss bank has been pushing to raise money from investors and roll out a new strategy to overcome an array of troubles, including bad bets on hedge funds, repeated shake-ups of its top management, and a spying scandal involving Zurich rival UBS. (Read more Credit Suisse stories.)