Credit Suisse Drops on Report of Capital Raising Plan

Updated on
  • Credit Suisse CEO has pledged to be `ruthlessly selective'
  • Switzerland has some of the toughest global capital rules

Credit Suisse Group AG is preparing a “substantial” share sale that will be announced when the company presents its strategic overhaul, the Financial Times reported, without saying how it obtained the information. The shares dropped.

The fresh funds will be used to absorb losses the bank will incur as it reorganizes, the FT said. The people cited a Goldman Sachs Group Inc. survey last week that found 91 percent of investors expect the Zurich-based bank to raise more than 5 billion Swiss francs ($5.2 billion) in new equity, the report said.

Chief Executive Officer Tidjane Thiam, who replaced Brady Dougan in July, is scheduled to present a strategy update on Oct. 21. Credit Suisse, Switzerland’s second-largest bank after UBS Group AG, is under pressure to make deeper cuts to the investment bank and allocate more resources to wealth management. Thiam, 53, told staff in a memo on his first day on the job that he would be “ruthlessly selective” about where the bank allocates its resources.

Christoph Meier, a spokesman for Credit Suisse, declined to comment when contacted by Bloomberg.

The shares dropped 3.4 percent to 23.63 Swiss francs at 2:52 p.m. in Zurich.

In his strategy update, Thiam may present plans to sell the U.S. private bank and scale back the prime brokerage and fixed-income businesses, Schweiz am Sonntag reported last month, without saying how it obtained the information. The measures may be accompanied by a capital increase, it said.

The CEO, who joined from Prudential Plc, has pledged to set out a strategy to make the business “less capital intensive and ensure we generate excess capital.” Swiss capital requirements are among the toughest in the world, with the government looking to raise the leverage ratio, showing how much capital a bank holds in the form of debt.

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE