Troubled lender Credit Suisse Group (CS) has been given a $54 billion U.S. credit line from Switzerland’s central bank.
The money is to help Credit Suisse buyback debt and avoid defaulting on its obligations. It is the latest effort to help the embattled Swiss lender stay afloat and avoid contagion in the global banking sector.
Credit Suisse’s stock rose as much as 40% on news of the money from the central bank before reversing lower and closing at just above $2 U.S. per share.
The Swiss government was to hold a special meeting to discuss the situation at Credit Suisse and discuss more permanent solutions to the bank’s troubles.
Remedies may include a separation of the bank’s Swiss unit and a potential takeover by fellow Swiss bank UBS Group (UBS).
Analysts at JPMorgan Chase (JPM) issued a note to clients saying that they see a takeover of Credit Suisse as the best case scenario moving forward.
Credit Suisse is Switzerland’s second largest bank and has been a going concern since 1856. A series of scandals and mismanagement caused the bank to lose a record $7.9 billion U.S. last year, wiping out a decade’s worth of profits.
Concerns about the stability of the bank were amplified recently when Credit Suisse announced that it was postponing the release of its annual report because U.S. regulators raised concerns about its accounting practices.
Worries about Credit Suisse’s financial health have roiled global stock markets in recent days. The lender’s share price has declined 73% in the last 12 months to trade at $2.16 U.S. per share in New York.
