Credit Suisse Group AG shares soared by at least 30 percent in premarket trading yesterday after the company secured a US$54 billion lifeline from the Swiss National Bank to shore up liquidity and investor confidence that sent its stock to record lows the previous day.
Shares of Switzerland’s second-largest lender were indicated at 2.18 Swiss francs, up 26 percent from Wednesday’s close.
The stock fell by as much as 30 percent the previous day after Credit Suisse’s largest backer said it could not offer any more financial assistance for regulatory reasons.
Photo: EPA
The Swiss bank’s announcement overnight helped stem heavy selling in financial markets in Asian morning trade yesterday.
Credit Suisse is to exercise an option to borrow from the Swiss central bank up to SF50 billion (US$53.8 billion), it said yesterday in a statement.
That followed assurances from Swiss authorities on Wednesday that Credit Suisse met “the capital and liquidity requirements imposed on systemically important banks,” and that it could access central bank liquidity if needed.
Credit Suisse is making a tender offer to buy back up to SF3 billion of US dollar and euro-denominated debt, the statement said.
Meanwhile, the bank’s top shareholder said “everything is fine” and the bank is not likely to seek more capital, the day after his comments helped spark the biggest-ever slump in the stock.
“These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation,” Credit Suisse chief executive officer Ulrich Koerner said in the statement. “My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.”
Credit Suisse has been battered over the past several years by a series of blowups, scandals, leadership overhaul and legal issues.
The company’s SF7.3 billion loss last year wiped out the previous decade’s worth of profits, and the bank’s second strategy pivot in as many years has failed to win over investors or halt client outflows.
Koerner told his staff yesterday to focus on facts as he pledged to rapidly move ahead with a plan to streamline operations.
The bank would continue to focus on the transformation of Credit Suisse from a position of strength, he said in a staff memo, citing an improved liquidity coverage ratio and recent capital raisings.
It had been a difficult week for the whole banking sector following the collapse of two US banks, Koerner said, adding that the delay of Credit Suisse’s annual report had also “led to further attention on Credit Suisse.”
The cost of insuring against the risk of default on Credit Suisse bonds blew out to distressed levels on Wednesday, while banking shares around the world, which had already been pummeled by the collapse of two regional US lenders in the past week, tumbled.
However, stock futures pointed to a sharply higher open for European equity markets yesterday.
The loan from the Swiss National Bank would not be enough to soothe investor concerns, JPMorgan Chase & Co analysts said.
“Status quo was no longer an option,” which means a takeover for Credit Suisse is the most likely outcome, especially by larger Swiss rival UBS Group AG, they said.
The Swiss government, central bank and the Swiss Financial Market Supervisory Authority were in contact to discuss ways to stabilize Credit Suisse, Bloomberg reported earlier.
Ideas floated — beyond the public show of support — included a separation of the bank’s Swiss unit and a long-shot orchestrated tie-up with UBS, people familiar with the matter said, adding that it is unclear which, if any, of these steps would actually be executed.
Additional reporting by Bloomberg
The Investment Commission yesterday approved a Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) application to invest an additional US$3.5 billion in its Arizona subsidiary to manufactured advanced chips. The world’s largest contract chipmaker’s board of directors last month approved the funding project after TSMC started moving manufacturing equipment into the fab in December last year in preparation for the production of 4-nanometer chips next year. TSMC said it has also commenced the second phase of facility construction in Arizona. The second fab is to produce semiconductors using 3-nanometer technology in 2026. Altogether, TSMC plans to spend US$40 billion on the Arizona fabs, doubling its
KEY SECTOR: Taiwan’s new chip legislation is insufficient, and a more strategic ‘chip act’ that covers the whole semiconductor ecosystem is needed, MediaTek’s chairman said MediaTek Inc (聯發科) chairman Rick Tsai (蔡明介) yesterday urged the government to formulate a state semiconductor strategy and comprehensive “chip act” that includes local chip designers and smaller-scale semiconductor companies, as they are facing intensifying competition from China. The government is playing an increasingly important role in safeguarding the local semiconductor industry’s competitiveness, given that the US, the EU and Japan are offering hefty subsidies and significant tax incentives to build semiconductor capacity domestically, as they have realized the strategic importance of semiconductors, Tsai said. To implement such a program, the government should take steps to finance a “chip act,” Tsai said
Microsoft Corp has threatened to cut off access to its Internet search data, which it licenses to rival search engines, if they do not stop using it as the basis for their own artificial intelligence (AI) chat products, people familiar with the dispute have said. The software maker licenses the data in its Bing search index — a map of the Internet that can be quickly scanned in real time — to other companies that offer Web search, such as Apollo Global Management Inc’s Yahoo and DuckDuckGo. Last month, Microsoft integrated a cousin of ChatGPT, OpenAI’s AI-powered chat technology, into Bing. Rivals
MOUNTING PRESSURE: Although bank failures in the US and Europe would not cause systemic risks, it would dampen consumers’ willingness to spend, GlobalWafers said GlobalWafers Co (環球晶圓), the world’s third-largest silicon wafer supplier, yesterday said that the financial turmoil in the US and Europe has dimmed the outlook for chip demand in the second half of this year, as growing economic uncertainty could dampen consumer spending. The Hsinchu-based wafer manufacturer said it is seeing greater pressure from economic uncertainty on the industry’s recovery, as customers would have not expected Silicon Valley Bank, Signature Bank and a tier-one bank like Credit Suisse Group SA to collapse suddenly. Although the failures are unlikely to cause systemic risks, consumers would be cautious of spending on non-essential items, such