ZURICH, March 27 (Reuters) – Sight deposits held by the Swiss Nationwide Financial institution (SNB) jumped final week, knowledge confirmed on Monday, suggesting that each Credit score Suisse (CSGN.S) and UBS (UBSG.S) might have taken massive chunks of emergency liquidity to safe their merger.
Sight deposits – money held by the SNB for industrial banks in a single day – jumped to 567 billion Swiss francs ($619 billion) from 515 billion francs every week earlier.
The 52 billion franc improve was the second-highest on file, simply behind a 52.4 billion franc leap in August 2011 when the SNB was promoting big quantities of francs to alleviate strain on the safe-haven forex.
Final week’s rise signifies that each UBS and Credit score Suisse might have used a number of the 200 billion francs in further liquidity provided by the SNB as a part of a state-sponsored rescue of Credit score Suisse.
UBS agreed to purchase Credit score Suisse for 3 billion Swiss francs in inventory in a merger engineered to keep away from extra market-shaking turmoil in world banking.
Credit score Suisse had already mentioned it could take 50 billion francs from the SNB below its emergency liquidity help (ELA) facility earlier than the UBS takeover.
As a part of the rescue, one other 100 billion francs was provided by the central financial institution to each UBS and Credit score Suisse below an prolonged model of the ELA scheme, whereas Credit score Suisse additionally had entry to 100 billion francs below a public liquidity backstop.
The SNB declined to touch upon Monday on the usage of the amenities. Credit score Suisse and UBS additionally each declined to remark.
“The rise is more likely to be a results of Credit score Suisse utilizing the additional liquidity provided by the SNB, and will additionally embody UBS utilizing the power too,” mentioned Karsten Junius, an economist at J.Safra Sarasin.
“How a lot precisely is troublesome to say, however all banks is also rising liquidity for the time being.”
Credit score Suisse tapped the Swiss Nationwide Financial institution for “a big multi-billion quantity” final weekend to safe its liquidity, the nation’s finance minister Karin Keller-Sutter advised Swiss broadcaster SRF on Saturday.
She mentioned this was as a result of prospects had once more withdrawn cash but additionally as a result of counterparties have been demanding ensures when doing enterprise with the financial institution.
($1 = 0.9166 Swiss francs)
Reporting by John Revill; Modifying by Hugh Lawson
: .