Credit Suisse Mulls Ways To Shore Up Its Capital
Credit Suisse is in the early stages of weighing options to bolster its capital after a string of losses has eroded its financial buffers, two people with knowledge of the matter told Oliver Hirt of Reuters.
Photo Insert: The entrance to Credit Suisse
The size of the increase would be likely to exceed 1 billion Swiss francs ($1.04 billion), but this has not yet been determined, said one of the people, who declined to be named because the deliberations are still internal.
The cash injection will help Switzerland's second-biggest bank to recover from billions of losses in 2021 and a series of costly legal headaches. Selling shares to some of its major existing investors is the preferred option, but Credit Suisse has not ruled out tapping all shareholders.
A sale of a business, such as Credit Suisse's asset management division, is also a possibility, another source stressed.
The bank had not yet decided on any potential action, they said. Any transaction was envisaged for the second half of this year. "Credit Suisse is currently not considering raising additional equity capital," the bank said in a statement.
"The Group is robustly capitalized with a CET1 ratio of 13.8% and a CET1 leverage ratio of 4.3%. Asset Management is an essential part of our group strategy presented last November, with four core divisions." The CET1 ratio is a key gauge of a bank's financial strength.
Credit Suisse shares fell 4.2% by 1000 GMT, compared with a 0.7% drop in the Swiss blue chip index and 0.9% drop in the European banking index, following the Reuters report. "The news, if confirmed, points to potentially more pain than we currently expect," Jefferies analysts wrote in a research note.
The Jefferies analysts suggested the move could reflect lower earnings than expected or else a backstop plan in case the environment for revenues and costs does not improve as expected in 2023.