Credit Suisse Wins Shareholder Support for Capital Increase

  • Thiam says capital will allow bank to take opportunities
  • Switzerland ``takes first place'' for average wealth

Credit Suisse Group AG won approval from its shareholders to sell about 6 billion francs ($5.9 billion) in stock to help fund an overhaul of operations and shore up its capital base.

Investors overwhelmingly agreed Thursday to Credit Suisse’s first share sale since 2012, part of a restructuring that includes plans to scale back its investment bank and sell a minority stake in its Swiss unit to the public.

New Chief Executive Officer Tidjane Thiam, 53, said strengthening the bank’s capital position will allow it to be in control of its destiny.

“Quite a few times since I took office, I have heard our teams in Asia or elsewhere, which generate returns well in excess of their cost of capital, telling me about missing out on attractive opportunities because of capital constraints,” he said at a shareholders’ meeting in Bern.

Tidjane Thiam in Bern today
Tidjane Thiam in Bern today
Photographer: Fabrice Coffrini/AFP via Getty Images

Switzerland’s second-biggest bank after UBS Group AG is betting on growth in Asia, eastern Europe and other emerging markets, where it plans to build up its business of managing money for the rich. The reorientation coincides with new Swiss rules calling for bigger buffers against potential losses.

“It’s absolutely vital for Credit Suisse to exceed the standards defined by regulators and this means that it is today necessary for us to increase our capital resources,” Thiam said.

The stock sale will allow the bank to increase its core equity ratio to 12.2 percent and its CET1 leverage ratio to 3.6 percent by the end of the year, he said. That’s better than Swiss requirements for those measures that take effect in 2019. The new rules also require the bank to issue more debt that can be converted into equity.

“We are confident that with the proposed capital increases, Credit Suisse will be in a position not just to implement its strategic plans but also to meet the known future regulatory capital adequacy requirements,” Chairman Urs Rohner said.

Thiam also spoke about Switzerland’s importance to the bank, saying it tops the most developed economies in terms of individual wealth. Average wealth per adult is 581,000 Swiss francs ($572,000), 70 percent more than in North America and four times the average for Western Europe, he said. “This is an opportunity that we are uniquely positioned to capture.”

Elsewhere in the developed world, the U.S. is an “attractive” opportunity with more than 600 billionaires, he said. Credit Suisse intends to use its investment banking prowess in the U.S. to increasingly manage the assets of the very wealthy.

The bank plans to raise 1.32 billion francs through a direct placement with some qualified investors and to sell stock for as much as 4.7 billion francs to all shareholders. The new issues are due to start trading on Dec. 4, after a period in which shareholders can trade their subscription rights.

Thiam, the former CEO of the British insurer Prudential Plc, took the top job at Credit Suisse in July, succeeding Brady Dougan, who had led the Swiss bank since before the financial crisis.

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