Swiss authorities and Credit Suisse Group AG are discussing ways to stabilize the bank, according to people familiar with the matter, after comments by its biggest shareholder and broader financial market jitters helped trigger a plunge in the stock on Wednesday.
In a first salvo to shore up confidence in the battered lender, Switzerland's central bank and financial regulator said the bank will receive a liquidity backstop if needed, according to a late statement on Wednesday. The regulator confirmed Credit Suisse meets the capital and liquidity requirements it imposes on systemically important banks.
The firm's leaders and government officials had discussed such a public show of support and a backstop as potential measures, Bloomberg reported earlier.
Other options included a separation of the Swiss unit and a long-shot orchestrated tie-up with larger Swiss rival UBS Group AG, according to people with knowledge of the matter, cautioning that it's unclear whether these steps will actually be executed.
The Swiss government has also floated the idea of acquiring a stake in Credit Suisse as part of a capital increase if necessary, two of the people said.
While scenario planning has been going on for some time, urgency has been added after the firm's shares plummeted to a record low and the cost to insure the bank's debt reached crisis levels. T
he lender had earlier asked the Swiss central bank and regulator Finma for public statements of support, according to the people, a request the authorities heeded around half past 8 p.m. local time.
Spokespeople for Credit Suisse, UBS and the Swiss National Bank declined to comment. The nation's finance ministry didn't respond to requests for comment.
Stock Issues
Credit Suisse's stock plunged as much as 31% on Wednesday, while some of its bonds dropped to levels that signal financial distress, as the Saudi National Bank ruled out increasing its stake because of regulatory constraints.
The plunge helped drag all European lenders lower as investors were quick to move away from banking risk after turmoil induced by the collapse of Silicon Valley Bank.
