ZURICH (Reuters) – Credit Suisse has already paid back some of the emergency liquidity offered by the Swiss National Bank (SNB), data suggested on Tuesday, signaling an ebbing of the liquidity crisis which triggered the lender’s fall.

Sight deposits – cash held by commercial banks overnight with the SNB – fell by 31 billion Swiss francs ($34.3 billion)last week, data published by the central bank showed.

The drop was the second-biggest weekly decline on record, second only to when the SNB started mopping up market liquidity after it quit negative interest rates last September.

In recent weeks sight deposits have soared as Credit Suisse received emergency liquidity infusions to head off a bank run as nervous customers pulled out their cash.

The lender last month said it intended to borrow up to 50 billion francs from the SNB in a last-ditch attempt to save itself after confidence evaporated following a string of blunders.

Following a state-sponsored takeover by rival UBS, another 200 billion francs in liquidity was also made available by the SNB.

As a result sight deposits rose from 515 billion in mid March to peak at 567 billion francs as the SNB deposited the cash with Credit Suisse, an upward trend which reversed last week as sight deposits fell to 532 billion francs.

Credit Suisse, the SNB and UBS declined to comment on the development.

Karsten Junius, an economist at J.Safra Sarasin, said the decline could be attributed to Credit Suisse paying back some of the emergency liquidity it took and no longer needing to draw on the central bank support.

“Confidence in the bank has been restored by the UBS merger, and from this data it would appear customer outflows have stopped,” Junius said.

“A bank run has been stopped by the SNB coming in and offering massive liquidity and customers are reassured by UBS being there too. Credit lines from other banks would also appear to have been re-established.”

The SNB may also have been active in forex markets, selling some of its foreign currencies to prop up the franc, an activity which would have seen sight deposits decline as the SNB received francs from commercial banks in return.

But this was likely to be minor, Junius said, saying the SNB only sold foreign currencies worth 27 billion in the last three months of 2022.

“It’s extremely unlikely the SNB sold more than 30 billion of forex just last week,” Junius said. “Confidence has been restored – the rescue seems to have done the trick. It seems to have been a successful operation.”

($1 = 0.9042 Swiss francs)

(Reporting by John Revill; Editing by David Holmes)

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