Swiss National Bank says it will provide Credit Suisse with liquidity if necessary

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The Swiss National Bank said Wednesday that Credit Suisse is currently well capitalized and that the central bank will provide additional liquidity if necessary, as regulators on both sides of the Atlantic tried to calm fears of a spreading crisis.

A statement from the Swiss Financial Market Supervisory Authority and the SNB said that Credit Suisse “meets the capital and liquidity requirements imposed on systemically important banks” and that the central bank will step in if the situation changes. The regulators also said that the failure of two U.S. regional banks in the past week does not pose a “direct risk of contagion” to Swiss banks.

The statement comes after the Swiss-listed shares of Credit Suisse fell more than 20% on Wednesday. The bank had previously delayed its annual report and said Tuesday that it found “material weakness” in its financial reporting in prior years.

Additionally, the Saudi National Bank — which is Credit Suisse’s biggest financial backer — said it could not provide additional capital to the company because of a regulatory issue. The Saudi bank’s chairman did say that his group was happy with Credit Suisse’s transformation plan and that the firm’s financial position appeared strong.

The American depositary receipts of Credit Suisse pared their losses after the announcement from regulators to about 14% for the session. European markets had already closed for the day when the statement was released.

Credit Suisse said in response on Wednesday night that “we welcome the statement of support” from the regulators.

The concern over Credit Suisse comes after the collapse of Silicon Valley Bank and Signature Bank over the past week, two of the largest U.S. bank failures in history. U.S. regulators on Sunday announced plans to backstop the deposits at the failed banks and to provide additional liquidity to the financial system.

The drop of Credit Suisse’s stock on Wednesday appeared to renew fear of broader bank issues. Shares of major banks in Europe and the U.S., including Deutsche Bank and Citigroup, retreated, as did many regional bank stocks.

The cracks in the banking system are appearing after rapid rate hikes by global central banks over the past year to fight inflation.

The announcement from Swiss regulators comes a day before the next monetary policy meeting of the European Central Bank. The U.S. Federal Reserve’s Federal Open Markets Committee is set to meet next week.