Credit Suisse Said to Study Novel Bond Sale to Offload Risk
- Bank seeking to reduce risk from rogue trading, cybercrime
- Bond would kick in for losses of $3.6 billion to $4.3 billion
Credit Suisse May Turn to Bonds to Reduce Bank Risk
Credit Suisse Group AG, seeking to free up capital while immersed in a costly overhaul, is pitching a plan to farm out some of its risk from potential losses linked to events like rogue trading and cybercrime, people with knowledge of the matter said.
The bank has approached bond investors, hedge funds and asset managers in recent months with the design for an instrument akin to catastrophe bonds that would cover operational losses between 3.5 billion Swiss francs ($3.6 billion) and 4.2 billion francs, four people said, asking not to be identified because talks are private. The insurance industry uses so-called cat bonds to limit exposure to disasters such as hurricanes and earthquakes. Investors get above-market yields for taking a chance on their money being wiped out.