European markets opened higher on Thursday after troubled bank Credit Suisse secured a £45bn funding deal.
Stock markets across the UK, France and Germany rebounded while Credit Suisse’s share price surged by 40%.
Overnight Credit Suisse said it would borrow up to 50bn francs (£44.5bn) from Switzerland’s central bank to shore up its finances.
Fears that Credit Suisse’s issues could cause a wider banking crisis had sent stock markets tumbling on Wednesday.
The main stock market indexes in London, Frankfurt and Paris opened as much as 1.7% higher.
Credit Suisse had sought help from Swiss National Bank after revealing it had found “material weakness” in its financial reporting.
It led its biggest shareholder, Saudi National Bank, declaring that it would not buy more shares in the bank, sparking panic among other investors.
Switzerland’s central bank said Credit Suisse had the money it needed but stressed it was ready to step in and help if needed.
The BBC understands that the Bank of England has been in touch with Credit Suisse and Swiss authorities to monitor the situation.
The US central bank had been forced to step in to prevent a run on bank deposits as panic spread.
Sir John Gieve, former deputy governor at the Bank of England, told the BBC that central banks were sending a “message” that such problems would be contained locally.
He added that in Credit Suisse’s case, the Swiss National Bank’s action was likely to be enough to stop the crisis spreading.
“What we’ve seen overnight is the Swiss central bank saying ‘no, we will not let this get into a disorderly collapse’,” he told the BBC’s Today programme.
“I don’t know what the future for Credit Suisse holds but so far they are still standing and it looks like the Swiss central bank will ensure it’s standing long enough to rearrange its affairs for the future.”
Leave a Reply