In a revamped cash call, Credit Suisse raises a “milestone” of $2.4 billion.
As part of a 4 billion Swiss franc cash call, Credit Suisse raised 2.2As part of a 4 billion Swiss franc cash call, Credit Suisse raised 2.24 billion Swiss francs ($2.39 billion), which was hailed as a “milestone” in its turnaround plan on Thursday.4 billion Swiss francs ($2.39 billion), which was hailed as a “milestone” in its turnaround plan on Thursday.
In order to help the Swiss bank recover from the worst crisis in its 166-year existence, management was able to exercise 98.4% of their subscription rights.
Ulrich Koerner, the company’s chief executive, said in a statement that “the successful completion of the capital increase represents a critical milestone for the new Credit Suisse.”
“It will enable us to further support our strategic initiatives from a position of financial strength and enable us to build a simpler, more stable, and more focused bank built on client demands, thereby generating value for shareholders,” he continued.
Credit Suisse has already sold equity to a consortium of institutional investors headed by the Saudi National Bank, raising 1.8 billion francs.
The approach must begin with the rights issue, according to Axiom Alternative Investments’ Jerome Legras.
But it’s just the beginning of a gruelling road.
Another fund manager claimed that the capital increase might tempt risk-averse investors to purchase the stock.
The bank will be promoted to risk-takers, according to Stephen Sola, founder of Sola Capital, who also stressed that “management must produce.”
Only 16.4 million shares remained unsold after the subscription rights were exercised. These are due to be sold on the market at or above the offer price of 2.52 Swiss francs, Credit Suisse said.
The 4 billion franc package is intended to support and strengthen Credit Suisse as it works to recover from scandals and significant losses that fueled speculation about its future and resulted in significant customer withdrawals.Mistakes have plagued Credit Suisse, including a $5.5 billion loss at American investment firm Archegos. It was also forced to halt $10 billion in supply chain finance funds linked to the bankrupt British financier Greensill.At the end of October, Credit Suisse said it planned to cut thousands of jobs and shift its focus away from investment banking and towards less turbulent wealth management.
Credit Suisse should now concentrate on its wealth management and Swiss arm, according to Vincent Kaufmann, head of Ethos, which represents shareholders holding more than 3% of the company’s equity.
Revamp Credit Suisse shares, which have fallen to record lows, were boosted last week as its leadership attempted to reassure markets that “leadership must focus on restoring the confidence of all stakeholders, not only the shareholders but also and perhaps more importantly the clients and the employees of the bank.” They have recovered slightly from closing above 3 Swiss francs on Monday, rising 3.2% on Thursday to reach 2.942 francs, which is notably above the contract subscription price.
Key elements of Credit Suisse’s rescue strategy still lack sufficient substance, notwithstanding the rights issuance and share placement that made Saudi National Bank an anchor shareholder. Axel Lehmann, the bank’s chairman, predicted a further loss for the institution in 2023, and the stock price decline has reduced the market value of the institution to less than 12 billion Swiss francs, or about the same as Swiss private bank Julius Bär. In the bank’s proposed makeover, wealth management would receive more attention while investment banking would be reduced. In order to raise money, Credit Suisse has decided to sell the majority of its Securitized Products Group and associated finance operations to American buyout fund Apollo Global Management (NYSE:APO).
Additionally, it must describe how it intends to spin off its investment bank into a new company that will be solely responsible for advisory work, such as facilitating mergers and acquisitions and capital market transactions. The bank intends to sell a portion of CS First Boston but may keep the remaining portion. (1 US dollar = 0.9415 Swiss francs)