Credit Suisse taps $81 billion lifeline from central bank

Credit Suisse Group arranged to borrow up to 50 billion Swiss francs ($81 billion) from the Swiss National Bank and offered to buy back debt to restore a loss of market confidence.

The troubled lender will borrow from a liquidity facility and is making an offer to buy back up to around three billion Swiss francs of dollar and euro debt, according to a statement.

The moves – unprecedented by a major Swiss lender since the 2008 financial crisis – are the largest Credit Suisse finances have had to shore up to date. The bank’s shares tumbled as much as 31 percent in Zurich trading on Wednesday, and its bonds fell to levels suggesting deep financial distress as lingering doubts about the scandal-plagued lender coincided with a global sell-off in bank stocks.

The government, central bank and financial regulator FINMA have been discussing ways to stabilize the bank after a turbulent day sparked by comments from the company’s biggest investor, Bloomberg previously reported.

“These actions demonstrate determined action to strengthen Credit Suisse as we continue our strategic transformation,” Chief Executive Officer Ulrich Koerner said in the statement. “My team and I are committed to moving fast to deliver a simpler and more customer-focused bank.”

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Credit Suisse announced at least its second debt buyback in the past six months as it weathers a collapse in investor confidence. It offered to buy back about $3 billion ($4.5 billion) of its debt in October last year, saying at the time it wanted to “take advantage of market conditions to buy back debt at attractive prices.”

The latest tender offer includes 10 senior debt securities valued at up to $2.5 billion and four euro-denominated senior debt securities valued at up to €500 million.

Switzerland’s second-largest lender, whose roots stretch back to 1856, has been plagued by a series of explosions, scandals, leadership changes and legal troubles in recent years. The company’s loss of 7.3 billion Swiss francs last year wiped out the gains of the previous decade, and the bank’s second strategic shift in as many years has so far failed to convince investors or halt customer outflows.