World News

Swiss government, central bank toss cash at coronavirus-hit companies

By John Revill and Silke Koltrowitz

ZURICH (Reuters) – The Swiss government and central bank will begin pouring money from Thursday into a slowing economy to prevent it from crumbling under the weight of the coronavirus epidemic.

Switzerland, where 103 people have died of the virus and 9,765 are infected, also tightened entry restrictions from neighboring countries in the Schengen free-movement area as it sought to tame the epidemic.

Daniel Koch, head of infectious diseases at the federal health agency, told a media briefing it was too early to say whether state restrictions on gatherings were flattening the infections curve in Switzerland, which borders hard-hit Italy.

Swiss authorities also introduced temporary curbs on the export of protective medical equipment to head off a shortage among medical workers. Koch said Switzerland was about to start domestic production of masks as well.

Officials opened the spigots on cash injections for companies large and small.

“Our society and the Swiss economy are confronted with enormous challenges,” Swiss National Bank Chairman Thomas Jordan told a news conference with Finance Minister Ueli Maurer.

“To combat this crisis, it is essential that companies have access to credit and the banking system has access to liquidity,” the SNB said in a separate statement.

The cabinet signed off on a 20-billion-Swiss-franc ($20.4 billion) emergency scheme under which companies can get state-backed, no-interest loans of up to 500,000 Swiss francs via their banks.

Companies suffering “substantial reductions in revenue” can apply for loans worth up to 10% of annual sales, to a maximum of 20 million francs. Loans larger than 500,000 francs will be 85% secured by the government and have an interest rate of 0.5%.

Economy Minister Guy Parmelin said 34,000 companies – with altogether 484,000 employees, or 9.5% of the Swiss workforce – had requested aid to compensate workers for shorter hours.

The SNB set up a COVID-19 refinancing facility for the unlimited supply of credit to the banking system. The interest rate is the same as the SNB’s policy rate of -0.75%.

Market supervisor FINMA said it welcomed the decision of all Swiss financial institutions to suspend share buybacks and called on them to be prudent with dividends. “Acting to preserve strength is not a sign of weakness,” it said.

FINMA CEO Mark Branson told reporters: “It is not a ban, it is an appeal. We are asking the boards to decide who needs the money more – Swiss clients or international and institutional investors.”

Big banks UBS and Credit Suisse embraced the new steps.

(Additional reporting by John Miller and Michelle Martin; Editing by Andrew Cawthorne and Angus MacSwan)