Credit Suisse Group AG (Swiss Lender) is the attention of everyone these days and there are even talks of default on the table. Recently, the Swiss-based lender has come into the news once again with its desire to get a loan from the Swiss National Bank.
Credit Suisse claims that it has the option to get up to $53.06 billion worth of loans from the Swiss National Bank. The credit lender is planning to take advantage of this option to get a loan under two facilities.
This will help the Swiss lender to improve its liquidity conditions and eventually prevent a default. Because if Credit Suisse goes down, it will further exacerbate the already struggling banking sector.
As per the details, the option includes two types of facilities: Covered loan and short-term liquidity injection. By using this option, Credit Suisse is going towards strengthening its liquidity situation preemptively. In a sense, it will help the company to avert default.
Credit Suisse has also expressed its desire to repurchase its debt securities of ten dollar denomination. The company plans to put $2.5 billion into this exercise alone.
In addition, there's also a plan to put 500 million euros for the repurchase of debt securities denominated in euros.
On Wednesday, the shares of Credit Suisse made a new low after one of its top investors pulled their support. The investor said it would no longer be providing funding to Credit Suisse.
That's why Credit Suisse decided to take the loan facility from the Swiss National Bank. According to the firm's CEO, these actions will strengthen the company and will allow it to continue delivering value to its stakeholders.
Earlier today, the Swiss National Bank also confirmed its support for Credit Suisse. So in that sense, it appears that Credit Suisse will not have any problem getting a loan.
Considering how the investors are keenly watching the banking sector, it appears that preventing the default of Credit Suisse will calm down the situation.