Credit Suisse ‘takes decisive action’ by borrowing up to £41bn from central bank – business live

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With a crisis raging, Credit Suisse has turned to its central bank for support in an attempt to calm fears over its finances.

In a statement overnight, Credit Suisse announced that it would take up to 50bn Swiss francs (£44bn) from the Swiss National Bank in what it called “decisive action” to strengthen its liquidity.

Credit Suisse found itself at the eye of the storm in the banking sector yesterday – shares tumbled 30% at one point – after its largest shareholder said it could not add to its stake in the bank.

That prompted talk with the Swiss National Bank and financial regulator FINMA, who declared last night that the SNB would provide liquidity “if necessary.”

Related: Credit Suisse has shot itself in the foot – and wounded the banking system | Nils Pratley

Credit Suisse’s CEO, Ulrich Koerner, said the additional liquidity would support Credit Suisse’s core businesses and clients, saying:

These measures demonstrate decisive action to strengthen Credit Suisse as we continue our strategic transformation to deliver value to our clients and other stakeholders.

We thank the SNB and FINMA as we execute our strategic transformation. My team and I are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs.

Credit Suisse also announced overnight that it will buy back 3bn Swiss francs worth of its debt, as part of its move to calm investors’ nerves.

Other central banks are also watching the situation. The Guardian understands that staff at the Bank of England are continuing to monitor developments in the financial sector closely.

Yesterday, the head of asset manager BlackRock warned that the collapse of Silicon Valley Bank last weel could just be the start of “a “slow-rolling crisis” in the US financial system with “more seizures and shutdowns coming”.

Related: SVB collapse may be start of ‘slow-rolling crisis’, warns BlackRock boss

Fears over the banking sector roiled markets yesterday. Around £75bn was wiped off the UK’s FTSE 100 index, as the blue-chip index slumped by 3.8% – its biggest percentage fall since the first day of the Ukraine war.

Stocks are expected to open higher today, clawing back some of Wednesday’s losses.

Also coming up today

The Credit Suisse crisis looms over the European Central Bank, as it meets to set eurozone interest rates today.

Back in February the ECB pre-committed to a large increase in borrowing costs today, of half a percent (50 basis points) – but that may be less palatable given the turmoil in the markets.

Previous rises in central bank interest rates, and the impact on bond prices, is clearly already causing serious ructions in the banking sector, with three US banks having failed in the last week. So with the markets in such turmoil, the ECB’s governing council may be tempted to hold off on a rate increase, or plump for a smaller quarter-point rise.

After all, the woes of the global banking sector mean that inflation is yesterday’s problem, says IG analyst Tony Sycamore.

Sycamore adds:

And to a certain extent, the past week’s events have done the dirty work of central banks and will dampen inflation. Higher funding costs, tougher regulation, lower margins, and capital raises will restrict the flow of credit to the economy, and both growth and inflation will slow.

The agenda