ZURICH • Credit Suisse has set out plans to raise 6 billion Swiss francs (S$8.8 billion) in fresh capital, as new chief executive Tidjane Thiam boosts the Swiss bank's financial strength to underpin its biggest overhaul in almost a decade.
Credit Suisse is emphasising wealth management and growing in Asia, while shrinking its investment bank, echoing moves by rival UBS and other banks to cut investment banking where tougher regulations are squeezing profitability.
Mr Thiam also announced changes yesterday to top management and said he will float shares in its domestic Swiss bank, as he set out his vision for Switzerland's second-biggest bank almost four months into the job.
Third-quarter results, which Mr Thiam described as "not very good", underscored the Zurich-based bank's need for change. Third-quarter pre-tax income fell 34 per cent to 861 million Swiss francs, primarily reflecting an 8 per cent drop in net revenue.
"That should validate in a way the strategy and confirms some of the insights that have guided us in the strategy," Mr Thiam told reporters. "The ambition in this strategy is to grow fundamentally. To grow and to resolve the capital issue for good."
Credit Suisse's capital position is an area where it trails rivals and has been a persistent concern for investors.
Credit Suisse shares fell as much as 4.5 per cent after the statement, but some analysts were positive about the strategy.
"All in, we see the announcements as positive," said Mr Jernej Omahen at Goldman Sachs. He said the capital increase was in line with expectations and the cost-cutting plans were credible, adding that the plans for a flotation of the Swiss arm were a positive surprise.
Mr Thiam said Credit Suisse would put more focus on managing the fortunes of the world's wealthy, especially in emerging markets, and will reduce the size of its investment bank and cut 2 billion Swiss francs in annual costs.
Credit Suisse said it plans to cut gross costs by 3.5 billion Swiss francs by the end of 2018, and will invest 1.5 billion Swiss francs in growth initiatives, to reduce the cost base to between 18.5 billion and 19 billion Swiss francs.
The bank will reduce the number of its staff in Switzerland by a net 1,600 over the next three years, and will cut the number of its investment bank staff in London. Mr Thiam estimated that 1,800 of its London-based staff did not need to be in such a costly location.
The bank aims to raise 1.35 billion Swiss francs from the private sale of shares and a further 4.7 billion Swiss francs via a rights issue to existing investors.
The bank had been widely expected to raise between 5 and 10 billion Swiss francs.
Mr Thiam also aims to streamline the bank by creating three geographic divisions: a Swiss universal bank, Asia-Pacific, and International wealth management.