Credit Suisse Soared 40% After Swiss National Bank Gave $54 Billion Fund
Wednesday night, Credit Suisse $瑞士信贷(CS.US$ asked the Swiss National Bank for 50 billion Swiss francs, equivalent to 54 billion U.S. dollars. However, this is not borrowing, but exercising rights, means that Credit Suisse can access the fund if necessary. The company stated this move is only to strengthen its liquidity. Credit Suisse's soared 40% in the open. The company also announced that it will repurchase 3 billion francs of US and Euro bonds, and it will repurchase its own debt at a low price.
Credit Suisse itself also released new financial data to further appease investors. The company pointed out that by the end of 2022, the proportion of its Common Equity Tier 1 Capital is 14.1%, and the Average Liquidity Coverage Ratio is 144%.
The higher the Common Equity Tier 1 Capital, the stronger the bank's ability to resist risks. After 2008, Basel III stipulated that this ratio shall be no less than 4.5% of the bank's overall risk capital. And Credit Suisse’s 14.1% data means the bank’s ability to resist risks far exceeds regulatory standards.
The Average Liquidity Coverage Ratio at 100% means that the company's cash can just meet the net outflow of funds in the next 30 days. Credit Suisse is 144% and it means that the liquidity of the group is sufficient.
Investors' panic over the recent bank issue is reasonable. Because Credit Suisse still has assets of 570 billion US dollars, still bigger than Lehman Brothers’ 600 billion back in 2008. If Credit Suisse really goes bankrupt, the impact on the financial system around the world will be unimaginable. But I still maintain my consistent view that the possibility of a real problem with Credit Suisse is very low. According to statistics from the Washington Post, the company has about 230 billion francs in deposits, but its liquidity is 118 billion, of which 62 billion is pure cash. This is not counting the credit line given by the Swiss National Bank. Unless more than half of customers all start withdrawing money, otherwise the company can handle any risk of a bank run.
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Delta East : What bullshit title! Soar by 40% compared to when? Already so many of investors losing BIG bucks and title still reflect “soar”, should be “sore”!!!