Credit Suisse to raise over 6b francs of capital in strategy shift after Q3 profit falls 24%

A Credit Suisse sign is seen on the exterior of their Americas headquarters in the Manhattan, New York.
A Credit Suisse sign is seen on the exterior of their Americas headquarters in the Manhattan, New York.PHOTO: REUTERS

ZURICH (BLOOMBERG, REUTERS) - Credit Suisse will raise about 6.05 billion Swiss francs (S$8.81 billion) of capital as part of a strategic overhaul that will also see the initial public offering of its Swiss banking unit.

The Zurich-based bank said it will sell 1.35 billion francs of stock to select shareholders and offer 4.7 billion francs to existing investors in a rights offer, according to a statement on Wednesday (Oct 21). Credit Suisse also plans to save 3.5 billion francs by the end of 2018 on a gross basis. Six new members will join the executive board.

Chief executive officer Tidjane Thiam, brought in to rebuild investor confidence, is seeking to boost returns that are under pressure from tougher capital requirements and record- low interest rates. Under Thiam's predecessor, the bank reduced emphasis on investment banking and focused more on wealth management. For many investors, that wasn't enough. The stock posted the worst performance among 10 global peers over the past five years.

The bank on Wednesday also reported third-quarter profit that missed analysts' estimates after posting a loss in the investment bank.

Net profit for the three months to end-September fell 24 per cent to 779 million Swiss francs, compared with a predicted 921 million francs in a Reuters poll.