With only a few days left before announcing a significant strategy rewrite, Credit Suisse (CSGN.S) is working quickly to finalise sales of business units that would lower the amount of funding it might require from investors.
The troubled Swiss lender is attempting to move past a string of scandals and legal actions and may undertake a structural overhaul to streamline its volatile investment banking division and put more of a focus on wealth management.
Analysts suggest it may need to raise up to $9.01 billion ($9.01 billion) in capital to restructure, sustain growth, and have a safety buffer, depending on what it does to reduce the size of its investment bank and the amount it generates via asset sales.
With its restructuring strategy, the group hopes to reassure the market. More information on this strategy is anticipated with the third-quarter results on October 27.
The second-largest bank in Switzerland has been under scrutiny due to a run of losses, prominent risk management failures, and top leadership changes.
After losing upwards of $5 billion as a result of the collapse of Archegos in March 2021, Credit Suisse was forced to raise capital, limit share repurchases, reduce its dividend, and restructure its management. It was also forced to halt customer funds associated with collapsed financier Greensill.
Then-CEO Tidjane Thiam was forced to resign in 2020 due to a spying scandal, and Switzerland’s financial watchdog claimed Credit Suisse had lied to them about the scope of its surveillance.
Thomas Gottstein served as his replacement until July 2022, at which point Credit Suisse appointed Ulrich Koerner as CEO and began a second critical evaluation within a year.
Antonio Horta-Osorio, who quit less than nine months after arriving due to breaching quarantine laws during the COVID-19 epidemic, was replaced as chairman by Axel Lehmann in January.
Urs Rohner, Horta-predecessor, Osario’s acknowledged that the bank had let down consumers and shareholders previously when he left the office last year.
Over the previous three quarters alone, Credit Suisse has lost around 4 billion Swiss francs, and its financing costs have increased as a result of credit rating downgrades.
Credit Suisse has previously stated that it plans to expand its wealth management business, transform its investment group into a “capital-light, advisory-led” operation, and assess strategic options for its Securitized Products division.
An 8.6% share in Allfunds Group was sold last week for 334 million euros (about $328.4 million). Additionally, for an unknown sum, it sold a 30% investment in Energy Infrastructure Partners.
A stake in the SIX Group, which manages the Zurich stock exchange, and two specialised Swiss banks, Bank-Now, Swisscard, and Pfandbriefbank, a joint venture with American Express, are reportedly among the additional assets that are up for sale.
The Savoy Hotel in the heart of Zurich, which may be worth about 400 million Swiss francs, is being sought after by Credit Suisse.
Reports suggested the bank’s U.S. assets management division may fetch roughly $2 billion in a sale and is attracting interest from money managers including Janus, Blue Owl, and others.
Media reports unveiled that the bank is also thinking about separating a portion of its advising and investment banking operations into a new company called First Boston, which might potentially attract outside investors.
Sources with information privy to the situation claimed the bank had contacted investors regarding a capital infusion.
It is understood that Credit Suisse has enlisted the aid of Morgan Stanley as well as the Royal Bank of Canada to organise a capital increase that will support its finances and provide money for restructuring.
Another option the Swiss bank is reportedly contemplating to help finance its recovery efforts is a convertible bond offering. As a result, the bank could be able to restrict the sale of shares at the moment’s low pricing.
Credit Suisse may, as a last resort, apply for public assistance.