Credit Suisse shares surged Thursday after the Swiss central bank agreed to loan the bank up to 50 billion francs ($54 billion) to bolster confidence in the country’s second-biggest lender and blunt concerns about the international financial system following the collapse of two US banks.

The European Central Bank on Thursday, however, stuck with plans for a big interest rate increase, keeping up the pace of its monetary tightening to contain inflation even as markets wobble. The ECB raised its policy rate by 50 basis points (bps).

The collapse last week of Silicon Valley Bank in the US has highlighted banks’ vulnerabilities to sharply higher rates, while a rout in Credit Suisse shares added to market turmoil.

It was expected that the turbulence could strengthen the case for major central banks to slow the pace or pause of rate increases ahead.

Credit Suisse announced the agreement before the Swiss stock market opened, sending shares up as much as 33 per cent before they settled at a 25 per cent gain, to 2.13 francs, in midday trading.

That was a massive turnaround from a day earlier, when news that the bank’s biggest shareholder will not inject more money into Credit Suisse sent its shares tumbling 30 per cent, dragging down other European banks.

The Swiss National Bank said Wednesday that it was prepared to back Credit Suisse because it meets the higher capital and liquidity requirements imposed on “systemically important banks,” adding that the problems that have hit some US banks don’t “pose a direct risk of contagion” to Switzerland.

It is, in short, an effort to build trust.

India impact

Analysts at Jefferies said the Swiss lender is more relevant to India than SVB. Credit Suisse has Rs 20,000 crore in assets, which is 0.1 per cent of the assets of the Indian banking sector.

“We expect RBI to keep close watch on liquidity issues, counter-party exposures and intervene as necessary. This may also lead to institutional deposits moving more towards larger/quality banks,” the analysts observed.