Did Credit Suisse nearly run out of cash before its UBS takeover?

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Credit Suisse Approached Minimum Cash Reserves Prior to UBS Acquisition

Credit Suisse was perilously close to breaching its minimum cash reserve requirements at the Swiss National Bank in the days leading up to its forced acquisition by UBS. As of mid-March 2023, the bank's internal cash levels at the central bank had dwindled to a point where they barely met the required internal limit. A breach of these reserves would signify a critical risk of the bank's inability to meet its payment obligations, according to statements from the Swiss financial regulator, Finma.
Emergency Liquidity Assistance Sought

In response to an impending liquidity shortage, Credit Suisse formally applied to the Swiss National Bank for emergency liquidity assistance (ELA) on March 15. This application was a direct measure to bridge the anticipated shortfall in its cash reserves. The Swiss National Bank subsequently pledged liquidity to Credit Suisse on March 16, with the bank indicating its intention to borrow up to 50 billion Swiss francs.
Regulator's Assessment of Risk

Finma, in a German-language decree, outlined that a breach of cash limits at the central bank indicates a significant risk that a bank may encounter difficulties in making payments. This assessment underscores the severity of Credit Suisse's financial position in the period immediately preceding its orchestrated rescue on March 19, the day it was compelled into the takeover by UBS.
Disclosure Through Legal Proceedings

The details regarding Credit Suisse's near-breach of cash reserves emerged through legal proceedings. Investor lawsuits filed in Switzerland concerning the decision to write down approximately US$17 billion of Credit Suisse's Additional Tier 1 (AT1) notes as a condition for the UBS takeover have prompted Finma to share its documentation with claimants. This disclosure provided insight into the bank's precarious financial state.

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Did Credit Suisse nearly run out of cash before its UBS takeover?

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