Credit Suisse shareholders have approved a CHF4 billion ($4.2 billion) capital raise amid a large-scale exodus of client assets and an expected CHF1.5 billion quarterly loss.
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Credit Suisse aprueba una recaudación de fondos de 4 000 millones de CHF para su reestructuración
Last month, Credit Suisse announced a major restructuring that will see 9,000 jobs being slashed and the sale of investment banking operations.
The bank also said it needed an extra CHF4 billion to shore up its capital base. On Wednesday, an extraordinary general meeting approved the issuance of new shares in exchange for the cash injection.
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Credit Suisse turns to petrodollars to fund turnaround
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Credit Suisse has returned to the Middle East to shore up its finances amid mounting losses and a deteriorating balance sheet.
The funds will come largely from the Middle East, with the Saudi National Bank agreeing to stump up CHF1.5 billion for a 9.9% stake in the bank.
Clients losing confidence
Before the EGM, Credit Suisse issued a market update that forecasts a CHF1.5 billion pre-tax loss for the fourth quarter, which will come on top of a CHF4 billion loss in the previous quarter.
The troubled bank outlined the extent of the challenge ahead as it revealed that clients had withdrawn 6% of assets under management from the whole group by the end of September.
Well-heeled clients had emptied 10% of their assets from the vaults of the bank’s flagship wealth management unit.
Credit Suisse is still reeling from a string of setbacks, which includes large-scale trading losses, damaging legal disputes and the enforced departure of a previous CEO and chair of the board.
Autocratic regimes
The new CEO and Chair pairing of Ulrich Körner and Axel Lehmann have pledged to cut back on risk to put the bank on a steadier course.
But the bank has faced some concerns for turning to Middle East investors to underwrite its transformation.
The capital raise has been criticised in some quarters for diluting the value of shares and potentially exposing the bank to the influence of autocratic regimes.
Lehmann has rejected the latter complaint, saying that individual shareholders will not interfere with the bank’s policies.
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Credit Suisse turns to petrodollars to fund turnaround
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Credit Suisse has returned to the Middle East to shore up its finances amid mounting losses and a deteriorating balance sheet.
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Credit Suisse sells fintech stake ahead of strategic overhaul
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