Credit Suisse raises fresh capital, drops Swiss IPO

[ZURICH]Credit Suisse said Wednesday it had launched a share issue aimed at raising some US$4.0 billion to allay capital fears, and backtracked on plans to take part of its Swiss division public.

Switzerland's second largest bank also said it had bounced back to black in the first quarter, posting a net profit for the first three months of the year of 596 million Swiss francs (S$834.8 million), compared with a 302-million-franc loss a year earlier.

Credit Suisse in a statement that the share issue should provide it with more flexibility in carrying out its ongoing restructuring plans, bolster its capital ratios and protect it against unexpected market volatility.

Following the share issue, which will be voted on at an extraordinary general meeting on May 18, Credit Suisse estimates its tier-one CET capital ratio - an important gauge of a bank's ability to resist a financial crisis - will rise to 13.4 per cent from 11.7 per cent currently.

The bank already approved a capital hike of $6.0 billion back in the autumn of 2015 to allow its new chief Tidjane Thiam to embark upon a wide-reaching restructuring plan, pivoting its focus towards wealth management and Asia.

At the time, it said it aimed to raise between 2.0-4.0 billion Swiss francs by taking part of its Swiss branch public.

But on Wednesday, the bank said it had reconsidered, and now aimed to maintain full ownership of its Swiss division.

"We believe that keeping 100 percent of our valuable Swiss bank, while raising capital through a rights offering with pre-emption rights, is the right course of action and will result in significant value creation for shareholders over time," Credit Suisse chairman Urs Rohner said in the statement.

Observers initially welcomed Thiam's plans, but their optimism has faded as the bank has faced market turbulence and legal woes that sent its stock price plunging more than 30 per cent last year.

Investors appeared to welcome the shift announced Wednesday, with Credit Suisse's share price jumping more than three percent to 15.76 Swiss francs apiece in mid-morning trading, as the Swiss stock exchange's main SMI index remained flat.

AFP