Credit Suisse shareholders greenlight $4.2 billion capital raise

On Wednesday, the Credit Suisse shareholders approved a capital raise of 4 billion Swiss francs ($4.2 billion) for financing the embattled lender’s extensive strategic program. The first, which received 92% support from shareholders, grants shares to new investors, including the Saudi National Bank, through a private placement. SNB will acquire a 9.9% stake in Credit Suisse. The chairman of the Swiss National Bank, Ammar AlKhudairy, told CNBC in late October that Credit Suisse had been acquired at a “floor price” and urged the Swiss lender not to compromise its plans for a radical reorganization. The second capital increase issues newly registered shares with pre-emptive rights to existing shareholders and passes with 98% of the vote. Credit Suisse Chairman Axel Lehmann said the vote marked an “important step” in building “the new Credit Suisse.” “This vote confirms confidence in the strategy, as we presented it in October, and we are fully focused on delivering our strategic priorities to lay the foundation for future profitable growth,” Lehmann said.
Credit Suisse forecast a loss of 1.5 billion Swiss francs ($1.6 billion) for the fourth quarter as it embarks on its second strategic overhaul in less than a year. The plan is to simplify the business model and focus on its Swiss wealth management division and domestic market. The restructuring plans include the sale of part of the bank’s securitized products group (SPG) to U.S. investment houses PIMCO and Apollo Global Management, as well as a downsizing of its struggling investment bank through a spin-off of the capital markets and advisory unit, which will be rebranded as CS First Boston. By 2025, the multi-year transformation is intended to shift billions of dollars of risk-weighted assets from the persistently underperforming investment bank to the wealth management and domestic divisions while reducing the group’s cost base by 2.5 billion, or 15%.

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