Midnight manoeuvres by central bankers don’t always work, but the Swiss National Bank clearly did the right thing by advancing a 50bn Swiss francs (£44bn) liquidity facility to beleaguered Credit Suisse. The action has bought some time for everybody to breathe and take stock. Credit Suisse itself did its bit by saying it would repurchase about $3bn (£2.5bn) of its own debt, presumably at an enormous discount to face value, to improve its financial ratios.
As it happens, the bank’s liquidity ratios were reportedly fine anyway, but extra capacity still matters at a moment when the specific worry is depositors yanking their money. In any case, once Credit Suisse had asked for a new facility, the request had to be granted. Refusal would have been devastating. A globally systemic bank cannot be left to flap in the wind. Credit Suisse’s shares rebounded on Thursday (albeit a net fall of 15% over four days this week should be nobody’s idea of a triumph) and the wider European banking sector enjoyed a better day.
