The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland March 24, 2021.
Arnd Wiegmann | Reuters
Credit Suisse Shareholders on Wednesday approved a capital raise of 4 billion Swiss francs ($4.2 billion) aimed at funding a major strategic overhaul of the struggling lender.
Credit Suisse’s capital raising plan is divided into two parts. The first, backed by 92% of shareholders, grants shares to new investors including the National Bank of Saudi Arabia through a private placement. The new share offering will see SNB hold a 9.9% stake in Credit Suisse, making it the bank’s largest shareholder.
SNB President Ammar AlKhudairy told CNBC in late October that Credit Suisse’s shares had been acquired at a “floor price” and urged the Swiss bank to “do not blink” in its radical restructuring plans. .
The second capital increase issued new shares for pre-registered purchase to existing shareholders and was approved with 98% of the votes.
Credit Suisse President Axel Lehmann said the vote marked an “important step” in the construction of a “new Credit Suisse”.
“This vote affirms our belief in strategy, as we presented in October, and we are fully focused on laying out our strategic priorities to lay the groundwork for our success,” Lehmann said. profitable growth in the future”.
Credit Suisse on Wednesday expects a loss of 1.5 billion Swiss francs ($1.6 billion) in the fourth quarter at the start of a second strategic overhaul in less than a year, which aims to simplify the business model to focus on the Swiss domestic market and wealth management division.
The restructuring plans include the sale of part of the bank’s securitization product group (SPG) to US investment firms PIMCO and Apollo Global Management, as well as downsizing the investment bank. struggling through the separation of its advisory and capital markets divisions. will be renamed CS First Boston.
The multi-year transition aims to move billions of dollars of risky assets from the continuously underperforming investment bank to the asset management and in-country divisions, while reducing the 2, $5 billion cost base, or 15%, by 2025.
‘Too big to collapse’ but needs more transparency
Vincent Kaufman, CEO of the Ethos Foundation, which represents hundreds of Swiss pension funds that are active shareholders of Credit Suisse, expressed disappointment at Wednesday’s vote that the group was no longer considering a single IPO. part of the Swiss domestic bank, which he said would “send a stronger message to the market.”
Despite the dilution of shares, Kaufman said the Ethos Fund will support issuing new shares to existing shareholders as part of a fundraising round, but opposes a private placement to investors. new, mainly SNB.
“The capital raise without priority for new investors exceeds the dilution limit set out in our voting guidelines. I have discussed it with some of our members and they all agree. agree that the dilution there is too high,” he said.
“We support partial capital raising with priority, still believing that a potential partial IPO of the Swiss division would also be a possibility to raise capital without diluting existing shareholders in the country. such a level, so we are not advocating this first part of a capital raise without a pre-purchase right.”
At Credit Suisse’s annual meeting in April, the Ethos Foundation issued a shareholder resolution on its climate strategy, and Kaufman said he was concerned about the direction of the bank’s new major shareholders.
“Credit Suisse remains one of the biggest lenders to the fossil fuel industry, we want the bank to reduce its exposure to risk, so I’m not sure this new shareholder will support such a strategy. I a little apprehensive that our message for a more sustainable bank will be diluted among these new shareholders,” he said.
Wednesday’s meeting was not broadcast, and Kaufman criticized the Credit Suisse board for proposing to raise capital and attract new outside investors “without considering existing shareholders” or inviting them to join. attend the meeting.
He also raised questions about the “conflict of interest” among the board members, with board member Blythe Masters also an advisor to Apollo Global Management, which is buying a portion of Credit Suisse’s SPG , and board member Michael Klein is expected to head the new division. consulting and negotiation unit, CS First Boston. Klein will be stepping down from the board to launch a new business.
“If you want to restore trust, you need to do it clean and that’s why we’re still not convinced. Again, a stronger message with the IPO of a local bank. Switzerland will reassure at least the pension funds we are advising,” he said.
However, Kaufman stressed he was not concerned about Credit Suisse’s long-term viability, classifying it as “too big to fail” and highlighting the bank’s strong capital buffer and shrinking capital outflow. out.
