Credit Suisse eyes $2bn capital hike, convertible bonds

ZURICH: Embattled bank Credit Suisse is considering a capital increase of around 2 billion Swiss francs ($2 billion) and the issue of convertible debt to help finance its turnaround plans, Swiss paper SonntagsZeitung reported, citing unnamed sources.

Switzerland’s second-biggest bank is trying to draw a line under a string of scandals and losses. It is due to present details of its revamp, along with quarterly results, on Thursday.

Credit Suisse has been racing to sell assets to limit the amount of fresh capital it might have to raise from investors. But proceeds from asset sales alone would not cover the restructuring bill, the paper said.

“It comes down to a capital increase, probably in the region of 2 billion francs,” it quoted a “source with access to the deliberations” as saying, citing reports that investors in the Gulf could provide the money.

Management was also considering issuing convertible bonds that would be used to cover losses if the Swiss Financial Market Supervisory Authority (FINMA) demanded it or if its core capital ratio fell below a certain threshold.

The bank has insisted it has robust capital and liquidity, with a core capital ratio of 13.5% at the end of June.

Credit Suisse has said it was looking to scale back investment banking operations to focus even more on managing the wealth of rich clients.

The paper said it would likely shift the business of advising on mergers and acquisitions as well as leveraged finance into a new unit, perhaps with external investors.

Plans to cut around 5,000 jobs would cost less than many expected, the paper said, because hundreds of bankers would go via the sales of various businesses it was divesting. A Credit Suisse spokesperson declined comment on the report.