Credit Suisse increased its capitalization by 2.4 billion
2022.12.09 01:37
Credit Suisse increased its capitalization by 2.4 billion
Budrigannews.com – After raising 2.24 billion Swiss francs ($2.39 billion) through a cash call for 4 billion francs, Credit Suisse celebrated a “milestone” in its turnaround plan on Thursday.
Managers tasked with getting the Swiss bank back on track following the largest crisis in its 166-year history received a boost as a result of shareholders exercising 98.4% of their subscription rights.
Ulrich Koerner, the company’s chief executive, stated in a statement, “The successful completion of the capital increase is a key milestone for the new Credit Suisse.”
He went on to say, “It will allow us to further support our strategic priorities from a position of capital strength and create a bank that is simpler, more stable, and more focused built around the needs of clients and generating value for shareholders.”
Through the placement of stock with a group of institutional investors led by Saudi National Bank, Credit Suisse had already raised 1.8 billion francs.
According to Axiom Alternative Investments’ Jerome Legras, “the rights issue is the necessary start of the process.”
“However, it is only the beginning of a lengthy and difficult journey.”
Another asset supervisor said the capital climb could urge risk-focussed financial backers to purchase the stock.
“Financial backers who will face challenges will be urged to take a risk on the bank,” said Stephen Sola, pioneer behind Sola Capital, adding that “the executives should convey”.
Only 16.4 million shares were left unsold after subscription rights were exercised. Credit Suisse stated that these are expected to be sold on the market at or above the offer price of 2.52 Swiss francs.
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The four billion franc package is intended to fund a turnaround and strengthen Credit Suisse as it tries to move on from scandals and significant losses that sparked rumors about its future and prompted significant customer withdrawals. Mishaps have plagued Credit Suisse, including a $5.5 billion loss on the American investment firm Archegos. It also had to freeze supply chain finance funds linked to the bankrupt British financier Greensill worth $10 billion. At the end of October, Credit Suisse announced that it planned to lay off thousands of employees and shift its focus from investment banking to wealth management, which is less volatile.
The head of Ethos, Vincent Kaufmann, stated that Credit Suisse should now concentrate on its wealth management and Swiss arm. Ethos represents shareholders who hold more than 3% of Credit Suisse stock.
“Leadership must concentrate on restoring the confidence of all stakeholders, including bank clients and employees, perhaps more so than shareholders,” Last week, as Credit Suisse’s leadership attempted to reassure markets, REVAMP Credit Suisse shares, which had already fallen to record lows, gained momentum. They closed above 3 Swiss francs on Monday, but have since retreated slightly to 2.942 francs, which is significant because it is above the deal subscription price.
Key components of Credit Suisse’s turnaround plan lack specificity, despite the rights issue and share placement that made Saudi National Bank an anchor shareholder. This week, Chairman Axel Lehmann said that the bank would make another loss in 2023. Meanwhile, the bank’s market value has fallen below 12 billion Swiss francs, about the same as Julius Baer’s.
The planned redesign of the bank includes reducing investment banking while placing a greater emphasis on wealth management. The majority of Credit Suisse’s Securitized Products Group and related financing businesses will be sold to Apollo Global Management, a U.S. buyout fund (NYSE:). to let money go.
It also needs to explain how it intends to spin off its investment bank into a new company that will focus on advisory work like arranging capital market deals and mergers and acquisitions. The bank plans to sell some of its stake in CS First Boston, but it could keep half of it ($1 equals 0.9415 Swiss francs).
