Credit Suisse jumped 5% as Swiss Central Bank throws financial lifeline.
The Swiss bank's problems have shifted the focus for investors and regulators from the United States to Europe, where Credit Suisse led a selloff in bank shares after its largest investor said it could not provide more financial assistance because of regulatory constraints.
Regulators in the private banking hub on Wednesday had sought to ease investor fears around Credit Suisse, which added to broader worries sparked by last week's collapse of Silicon Valley Bank and Signature Bank, two U.S. mid-size firms.
Asian stocks had extended Wall Street's tumble on Thursday and investors bought gold, bonds and the dollar, leaving markets on edge ahead of a European Central Bank meeting later in the day. The bank's announcement in the early European morning helped trim some of those losses though trade was volatile.
In its statement early Thursday, Credit Suisse said it is exercising its option to borrow from the Swiss National Bank up to 50 billion Swiss francs ($54 billion).
Investor focus is now on any action by central banks and other regulators in Asia to restore confidence in the banking system as well as any exposure regional businesses may have to Credit Suisse.
In a joint statement on Wednesday, the Swiss financial regulator FINMA and the nation's central bank sought to ease investor fears around Credit Suisse, saying it "meets the capital and liquidity requirements imposed on systemically important banks." They said the bank could access liquidity from the central bank if needed.
Credit Suisse said it welcomed the statement of support from the Swiss National Bank and FINMA.
Credit Suisse would be the first major global bank to be given such a lifeline since the 2008 financial crisis - though central banks have extended liquidity more generally to banks during times of market stress including the coronavirus pandemic.
SVP's demise last week, followed by that of Signature Bank two days later, sent global bank stocks on a roller-coaster ride this week, with investors discounting assurances from U.S. President Joe Biden and emergency steps giving banks access to more funding.
FINMA and the Swiss central bank said there were no indications of a direct risk of contagion for Swiss institutions from U.S. banking market turmoil.
Earlier, Credit Suisse shares led a 7% fall in the European banking index (.SX7P), while five-year credit default swaps (CADS) for the flagship Swiss bank hit a new record high.
The investor exit for the doors prompted fears of a broader threat to the financial system, and two supervisory sources told Reuters that the European Central Bank had contacted banks on its watch to quiz them about their exposures to Credit Suisse.
The U.S. Treasury also said it is monitoring the situation around Credit Suisse and is in touch with global counterparts, a Treasury spokesperson said.