Swiss bank Credit Suisse on Wednesday announced plans for two capital increases to raise just over 6 billion Swiss francs ($6.28 billion), as well as a raft of changes to its top management and a partial flotation of its Swiss universal bank.
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Credit Suisse also aims to consolidate its London estate, which includes five locations across the city, by sub-letting a few sites as well as offshoring staff.
It is a bonfire of the vanities-and, fittingly, the bond, rates and currencies traders at Credit Suisse are the ones being burned.
On Wednesday, Tidjane Thiam will probably reveal a strategy to prune Credit Suisse’s investment bank in favor of wealth management.
Credit Suisse also aims to raise a total of 6.05 billion Swiss francs ($6.3 billion, 5.6 billion euros) by selling stock to selected shareholders and existing investors. Third-quarter pretax income fell 34 percent to 861 million francs, primarily reflecting an 8 percent drop in net revenue.
The firm’s investment banking division was among the hardest hit, with a pre-tax loss of 125 million francs ($130 million) in the third quarter, a sharp decline from 516 million francs ($540 million) earned over the same period previous year. Credit Suisse also plans to save 3.5 billion francs by the end of 2018 on a gross basis. A key element, he said, is “to resolve the capital issue for good”.
Zuercher Kantonalbank analyst Andreas Brun said a new requirement in line with the 5 percent leverage ratio target cited in an unconfirmed report would leave Credit Suisse with a 5 billion franc shortfall in core capital based on his full-year estimates.
“The new strategy is very comprehensive and probably more than anticipated”, said one of the bank’s 20 biggest investors, who asked not to be named. “This translated into lower profits and was particularly visible in our fixed income sales and trading performance”.
Credit Suisse said Thomas Gottstein will run its Swiss unit, while Iqbal Khan will run its global wealth management business.
Thiam had hinted at the possibility of a capital raising in an interview with CNBC shortly after he was appointed.
Credit Suisse said it plans an initial public offering for the Swiss unit by the end of 2017.
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Mr. Thiam, the former CEO of United Kingdom insurer Prudential PLC, has no experience running a bank.
