Credit Suisse is seeking 4 billion francs ($4.05 billion) of capital, including 1.5 billion francs from the Saudi National Bank, to rebuild the business as it emerges from a string of scandals.
The Swiss lender has also agreed to sell a portion of its securitized commodities division to US investment groups Pimco and Apollo, giving it a capital markets and financial position over the next three years under the revived CS First Boston brand. We outlined a plan to spin off our advisory business.
credit suisse said on Thursday it would cut costs by CHF2.5 billion, or 15% of its cost base, by 2025. He added that the workforce will be reduced from 52,000 to 43,000 over the next three years, with plans to cut 2,700 roles by the end. This year’s.
The move is part of the lender’s second strategic refresh in less than a year.
“This is a historic moment for Credit Suisse,” said Ulrich Kellner, Chief Executive Officer. “We are fundamentally restructuring investment banking to help create a new bank with a simpler, more stable, and more focused business model built on customer needs.”
Körner appointed CEO in July by power of attorney Get rid of scandal-prone investment banks, find savings, and dedicate more resources to wealth management.
Credit Suisse also reported a third-quarter loss of CHF342 million on Thursday after warning three months ago that losses were likely.
Analysts had expected a weaker performance for Credit Suisse investment banking as it relied on sectors that struggled in the third quarter, such as leveraged finance and dealmaking.
The bank also lost revenue after cutting divisions such as its prime brokerage unit. scandal Over the collapse of Greensill Capital and family office Archegos last year.
Under strategic plan, Credit Suisse plans to reduce investment banking risk-weighted assets by 40% over the next three years and focus on offering equities, foreign exchange and interest rates to institutional and wealth management clients is.
Credit Suisse will also set up a capital release product unit called the ‘Bad Bank’ to store risky assets it seeks to wind down. The unit includes the bank’s securitized products business, although Credit Suisse has also agreed with Pimco and Apollo to “transfer a significant portion” of the unit’s assets.
If the bank’s investors approve a capital raise of CHF4 billion at its extraordinary shareholders’ meeting on 23 November, the Saudi National Bank will become the group’s second largest with a 9.9% stake behind US investment group Harris Associates. will become the largest shareholder.
The bank’s top five shareholders include the Qatar Investment Authority and Olayang Group, a private investment firm with Saudi roots.
According to Credit Suisse, the investment will help boost the bank’s common equity Tier 1 ratio, a measure of its financial strength, from 12.6% to 14%.
Also, director Michael Klein said he would leave the board and advise Korner on the spin-out of the CS First Boston business, which he would later lead as CEO. The bank also confirmed a Financial Times report over the summer that former investment bank chief executive Christian Meissner is leaving the group.
Credit Suisse reported a CHF12.9 billion outflow as clients of its wealth management business and Swiss domestic banks withdrew money from their accounts and switched to rivals. Dixit Joshi, the bank’s new chief financial officer, said most of the withdrawals were made in response to rumors on his social media that the bank was in trouble.
Revenue was down 30% year-on-year. This was driven by investment banking revenues down 58%, wealth management revenues down 18% and Swiss domestic banks down 9%.
The business also secured CHF178 million against major litigation provisions and impaired IT-related assets of CHF145 million in Wealth Management. Overall, costs fell by 10% year-on-year as salaries and bonuses fell by CHF398 million for him, reflecting lower earnings.
Credit Suisse announced last week that it had sold its 8.6% stake in Spanish listed investment firm Allfunds for €334 million.
The bank has also settled a series of legacy lawsuits, including agreeing to a €238 million fine following a French probe into tax evasion and money laundering. $495 million settlement With U.S. prosecutors over the sale of mortgage bonds during the financial crisis.
Credit Suisse shares have fallen 48% this year to SFr4.76, hitting a record low this month after becoming the center of social media speculation about its financial health.
https://www.ft.com/content/e2ba41c5-586c-44ec-a01f-73f522a5850f Credit Suisse Launches $4 Billion Funding Backed by Saudi Arabia