Credit Suisse to raise $4b
Apr 27, 2017-
Credit Suisse will raise around 4 billion Swiss francs ($4 billion) from its shareholders, the embattled bank said on Wednesday, trying to close the gap in financial strength with rivals.
The bank said the decision, which saw management ditch an alternative plan to publicly list part of its Swiss business, should remove any concerns over the group’s capital strength.
“This was an option which—we got very clear views from our shareholders—was seen as the best option,” the bank’s finance chief David Mathers told journalists, as it unveiled a rebound in quarterly profit but struck a cautious tone about the future.
The move follows capital raising by German rival Deutsche Bank earlier this year, and should benefit from a rally in bank stocks after French centrist Emmanuel Macron took a step towards leading his country.
But while the decision may resolve one of the uncertainties over the bank, which made billions of francs of losses last year, others remain.
The bank’s management is fighting investor protest over high executive pay and the Netherlands is leading an investigation of alleged tax evasion and money laundering involving the group.
Credit Suisse’s announcement that it would raise fresh capital through a rights issue prompted a mixed response from analysts.
“How can a bank as big as CS be so volatile in terms of its earnings and unpredictable as to how much capital it needs? They are being forced to adjust quarter by quarter,” said Chirantan Barua, an analyst with Bernstein.
“This may not be the last capital raise.”
Others, such as Macquarie, were more upbeat, predicting that investors would be relieved that the decision had finally been made.
Shares in Credit Suisse, which opened down 1.3 percent, traded up 2.35 percent at 0730 GMT, ahead of the European banking sector index.
Keen to shore up its balance sheet, Switzerland’s second-biggest bank had announced in 2015 plans to sell 20-30 percent of its highly profitable Swiss business through an initial public offering (IPO) for up to 4 billion francs.
However, Chief Executive Tidjane Thiam said in February the bank was examining alternatives to the IPO, which had been pencilled in for the second half of this year.
Published: 27-04-2017 10:21