Credit Suisse exits distressed debt trading as bank cuts risk
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The Swiss lender is selling a book of assets with a market value of about US$250 million (S$333.6 million).
PHOTO: REUTERS
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LONDON – Credit Suisse is exiting distressed debt and special situations trading as part of its broader exit from risky and capital-intensive businesses.
The bank is selling a book of assets, including bond and loan positions related to distressed companies, with a market value of about US$250 million (S$333.6 million), according to people with knowledge of the matter.
Final commitments from bidders are due this week after the portfolio was put up for sale in December 2022, said the people, who asked not to be named as the details are private.
The Swiss lender is in the early stages of a costly restructuring that includes cutting 9,000 jobs
As part of the revamp, the bank has created a “non-core unit” that houses assets it plans to liquidate because they do not have ties to the key wealth management business or fit into the investment bank strategy.
A spokesman for Credit Suisse declined to comment on the sale.
The bank’s special situations and loan trading team could also be transferred to any firm that buys the assets, some of the people said. No formal agreements on hiring have yet been made.
The portfolio, which has as many as 30 trading positions, includes a revolving credit facility of struggling auto-parts maker Standard Profil Automotive that has an interest rate of 14 per cent. Other positions include claims on Thomas Cook, which collapsed in 2019.
Exiting the distressed debt business, in which Credit Suisse was once one of the biggest players, allows it to allocate capital elsewhere instead of the relatively higher amounts needed to back the riskier activity.
In a strategy update announced in October, the bank said it will also seek to reduce the leverage exposure in fixed income trading by US$20 billion.
Last week, the bank said it expects a gain of US$800 million in the first quarter from the sale of its securitised products group to Apollo Global Management.
A US$4 billion (S$5.4 billion) share sale in the autumn and other measures have helped bolster the bank’s key capital ratio to 14.1 per cent, while the sale to Apollo will likely add another 30 basis points in the first quarter. BLOOMBERG
