Credit Suisse Will Raise $4 Billion and Scrap I.P.O. of Swiss Unit

Credit Suisse Will Raise $4 Billion and Scrap I.P.O. of Swiss Unit

- in World Biz

Tidjane Thiam, the chief executive of Credit Suisse, is shifting its business model away from riskier, capital-intensive trading and banking.

Denis Balibouse/Reuters

LONDON — Credit Suisse said on Wednesday that it would raise $4 billion in new capital through a share sale and retain full ownership of its Swiss universal bank as the company continues restructuring.

Analysts had expected the additional capital raising after the lender seemed to sour on plans for a partial initial public offering of its Swiss unit in recent months. A special meeting to approve the latest capital increase is set for May 18.

After joining the bank in 2015, Tidjane Thiam, the Credit Suisse chief executive, announced plans to raise $6.3 billion in new capital and reduce its costs by billions of dollars by the end of 2018. The company said at the time that it might need to raise as much as 11 billion Swiss francs, or about $11.1 billion, to complete its restructuring.

Mr. Thiam is shifting the lender’s business model away from riskier, capital-intensive trading and banking. The bank, which has large operations in New York and London, has shrunk its investment bank and is placing greater emphasis on its wealth-management business, particularly in Asia and other emerging markets.

In February, the bank announced it would cut more than 5,500 jobs by the end of this year to further reduce costs and improve its prospects.

“This capital raise will allow us to continue to invest in growth at highly attractive returns; to strengthen balance sheet resilience for our clients and other stakeholders; and to afford the costs associated with our ongoing restructuring plans,” Mr. Thiam said in a news release on Wednesday.

The fund-raising comes as the bank faces pressure from investors over pay. The company suffered its second consecutive annual loss in 2016, but its bonus pool rose 6 percent.

The lender also agreed in December to pay $5.3 billion to settle an investigation by the United States authorities into the packaging and sale of mortgages before the 2008 global financial crisis.

In hopes of stemming shareholder discontent, Credit Suisse said this month that Mr. Thiam and its top executives would voluntarily reduce their bonuses 40 percent and that the company’s directors would not increase their compensation this year. Compensation is expected to be a sore spot for some investors at the company’s annual meeting on Friday.

In the first quarter, the bank showed progress in its turnaround after it returned to a profit, driven by a strong performance in its wealth-management business and an upswing in fixed income trading in its global markets business. The improvement in trading of bonds and other fixed-income trading continued a trend seen in the first quarter among many of its American banking rivals.

Credit Suisse reported a profit of 596 million francs in the first quarter, compared with a loss of 302 million francs in the same period a year earlier.

Revenue rose 19 percent to 5.5 billion francs in the quarter.

The bank also said on Wednesday that it anticipated closing its strategic resolution unit — a collection of businesses and assets that it considers noncore going forward — by the end of next year.

Continue reading the main story

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like

Advertising: As Facebook Changes Its Feed, Advertisers See Video Ambitions

While Facebook said that it wanted people to