Credit Suisse $54 billion lifeline offers limited respite to global banks

By John Revill, Amanda Cooper and Tom Sims

(Reuters) - Credit Suisse sought to shore up its liquidity and restore investor confidence on Thursday by borrowing up to $54 billion from Switzerland's central bank, though it proved to offer only limited respite to global banking stocks.

The Swiss lender is the first major global bank to be thrown an emergency lifeline since the 2008 financial crisis and its troubles have raised serious doubts over whether central banks will be able to sustain aggressive interest rate hikes.

However, the European Central Bank raised interest rates by 50 basis points on Thursday as flagged, stressing the resilience of the euro area banking sector while assuring it had plenty of tools to offer liquidity support if needed.

The ECB said it was "monitoring current market tensions closely and stands ready to respond as necessary to preserve price stability and financial stability in the euro area".

Credit Suisse shares briefly bounced from a 25% fall on Wednesday after its statement, which came in the middle of the night in Zurich, but then faded and last traded 17.7% higher.

Major U.S. bank shares including JP Morgan, Morgan Stanley and Bank of America slipped between 1% and 1.5% in early trading on Thursday, while the benchmark S&P 500 Banks Index was 2% lower.

Mid-sized and regional banks such as First Republic, PacWest Bancorp and Western Alliance Bancorp, KeyCorp, Comerica Inc and Fifth Third Bancorp tumbled between 3.5% and 30%.

Europe's banking index was up 1.3% by 1454 GMT, after days of heavy losses due to investor fears over potential bank stresses across the world.

The unease spread beyond the financial sector, with German corporate treasurers urged by their industry association not to "underestimate the current situation."

Since March 8, before last week's collapse of Silicon Valley Bank (SVB), European banks have lost around $165 billion in market value, Refinitiv data shows.