By The Financial District
Oct 8, 20222 min
Credit Suisse will buy back up to 3 billion Swiss francs ($3 billion) of debt, the embattled Swiss bank said, making a show of strength as it seeks to reassure investors after a tumultuous week, John Revill reported for Reuters.
Photo Insert: The bank said the debt buyback would "allow us to take advantage of market conditions to repurchase debt at attractive prices."
The move trims the Swiss bank's debt burden and is an attempt to bolster confidence after steep falls in its stock price and bonds. Unsubstantiated rumors that its future was in doubt have swirled on social media amid concern it may need to raise billions of francs in fresh capital.
One of the largest banks in Europe, Credit Suisse has had to raise capital, halt share buybacks, cut its dividend, and revamp management after losing more than $5 billion from the collapse of investment firm Archegos in March 2021, when it also had to suspend client funds linked to failed financier Greensill.
The bank said the debt buyback would "allow us to take advantage of market conditions to repurchase debt at attractive prices." Its shares were indicated 1.5% higher in premarket activity on the Swiss exchange, indicating some investor relief.
"It's an opportunistic move to take advantage of market conditions that might be reassuring to some investors," said Vontobel analyst Andreas Venditti.
"If bought below par, a gain results that will increase capital slightly."
Bank executives spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital. Chief Executive Ulrich Koerner has also told staff in a memo that it has sufficient capital and liquidity.
Earlier this week, in an unusual step, the Swiss National Bank, which oversees the financial stability of systemically important banks in Switzerland, said it was monitoring the situation at Credit Suisse.