Credit Suisse shareholders have approved capital increases worth some 4 billion Swiss francs ($4.2 billion) as Switzerland’s second-largest bank embarks on a sweeping reform – Copyright AFP Daniel ROLAND
Credit Suisse shares fell again on Wednesday after it announced it expects a surprise fourth-quarter pre-tax loss of up to $1.6 billion as it launches a sweeping overhaul of its operations.
Shaken by repeated scandals, Switzerland’s second-largest bank unveiled a reform in late October but accepted that its accounts would take a hit of up to 1.5 billion Swiss francs ($1.6 billion) in the last three months of the year. .
At an extraordinary general meeting, the shareholders approved capital increases worth around four billion Swiss francs.
“The approved share capital increase is expected to increase Credit Suisse’s CET1 ratio and support its strategic transformation,” the bank said in a statement, referring to the ratio that compares a bank’s capital to its risk-weighted assets.
“The increase will take place through two capital increases with expected aggregate gross proceeds of approximately four billion Swiss francs.”
At around 1000 GMT, the group’s shares were down 4.7 percent at 3.67 Swiss francs, while the main SMI index of the Swiss stock market was up 0.15 percent.
The scale of the fourth-quarter losses “will depend on a number of factors, including the performance of the investment bank during the remainder of the quarter, the continued exit of non-core positions, any impairment of goodwill, and the outcome of certain other actions, including potential real estate sales,” the Zurich-based bank said in a statement.
Credit Suisse said in October that it expected to incur restructuring, software and property damage charges of around 250 million Swiss francs in the fourth quarter as part of its review.
– Question of confidence –
The bank’s reorganization is aimed at drastically reducing the scale of its investment banking.
However, the restructuring takes place in an unfavorable context for the banking sector.
His investment bank suffered the backlash from the “substantial industry-wide slowdown” in the capital markets and reduced activity in the selling and trading markets, he said.
“The bank expects these market conditions to continue in the coming months.”
Credit Suisse launched its new strategy after huge losses in the third quarter, in an attempt to repair the damage after a series of scandals.
In addition to revamping its investment banking unit, the announced measures include cutting 9,000 jobs and a capital injection from the Saudi National Bank.
Andreas Venditti, an analyst at Swiss investment managers Vontobel, said the “massive net outflows” in wealth management, the bank’s core business along with its Swiss national banking, “are deeply concerning, all the more so as they have yet to be fully realized.” reversed.
“Credit Suisse needs to restore confidence as quickly as possible, but that’s easier said than done.”