Exclusive: Credit Suisse asks investors about capital raise – sources

The logo of Swiss bank Credit Suisse is seen in an office building in Zurich, Switzerland, September 2, 2022. REUTERS/Arnd Wiegmann

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FRANKFURT, Sept 22 (Reuters) – Credit Suisse is probing investors for fresh money, two people familiar with the matter said.

The bank has in recent weeks begun talking to investors about the move, the sources said. Various scenarios are being discussed for the investment bank, including the most drastic option of largely exiting the US market, two sources said.

It’s unclear how enthusiastic investors are and interest could be dampened by the fact that the bank, which has battled a series of scandals, has raised nearly 12 billion francs ($12.22 billion) of capital since 2015, almost equivalent to its current market value. .

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The shares fell on the news and closed down 5.5% at 4.647 francs, hitting their lowest on record. The sources said no decision had been made and did not specify how much money the bank would seek to raise.

A spokesperson for Credit Suisse (CSGN.S) said: “We have stated that we will provide an update on the progress of our comprehensive strategy review when we announce our third quarter results. It would be premature to comment on the results. potential by then.”

The spokesperson added: “Credit Suisse is not leaving the US market.”

Beyond investment banking, Credit Suisse’s business in the United States includes asset management.

Bloomberg reported separately that Credit Suisse is considering selling its LatAm Wealth business outside of Brazil.

Quarterly results are expected on October 27.

Credit Suisse was fined last year for arranging a fraudulent loan in Mozambique, hit by the collapse of Archegos, tarnished by its involvement with defunct financier Greensill Capital and reprimanded by regulators for spying its leaders.

As part of a restructuring launched by Chairman Axel Lehmann, the bank plans to reduce its investment banking to focus even more on its flagship wealth management business.

The bank announced its second strategy review in a year and replaced its chief executive in July, bringing in restructuring expert Ulrich Koerner to trim investment banking and cut costs by more than $1 billion. . Read more

In the last three quarters alone, losses amounted to nearly 4 billion Swiss francs. Given the uncertainties, the bank’s funding costs have skyrocketed. Deutsche Bank analysts in August estimated a capital shortfall of at least 4 billion francs.

The sale of its mortgage and other securitization business, already reported, could cover some of this.

There is significant interest in the business, sources said, including from financial investors, other banks and insurers. The company is profitable, but also capital intensive. An expert estimated it to be worth between $1 billion and $2.5 billion.

In addition, other small businesses could be sold.

One of the sources who spoke to Reuters said it would likely be difficult to avoid a capital raise. The large investors with whom the bank is in talks are however very demanding to participate in a capital increase.

Among the board members who will ultimately decide on strategy, opinions differ on how radical the cut will be in investment banking.

If the bank were to largely withdraw from US investment banking, some key areas for core business with millionaires and billionaires would shift to other parts of the bank.

Credit Suisse also plans to cut about 5,000 jobs, or about one in 10 positions, as part of cost cutting. Read more

($1 = 0.9762 Swiss francs)

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Additional reporting by Pamela Barbaglia in London and Megan Davies in New York; Written by Michael Shields and John O’Donnell; Editing by Elisa Martinuzzi, Edmund Blair and Jan Harvey

Our standards: The Thomson Reuters Trust Principles.

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