Credit Suisse unveils measures worth £5.69 billion to boost capital

Written on:July 18, 2012
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Credit Suisse

Credit Suisse...Taking capital measures to become resilient

Swiss company Credit Suisse unveiled that it would issue convertible bonds, sell assets and cut more costs to boost its capital by SFr8.7 billion (£5.69 billion), to restore investors’ confidence in the firm, after it came under serious criticism by Swiss National Bank (SNB) to improve its capital.

SNB welcomed the move by the bank saying, “In an environment that remains particularly challenging for the international banking system, these measures substantially increase the resilience of Credit Suisse Group.”

Credit Suisse’s chief executive Brady Dougan, who was lauded for steering the bank through the financial crisis without seeking a bailout, came under heavy criticism when the bank’s shares plummeted last month and the SNB called for urgent action to improve its capital this year.

Elucidating on its measures to improve capital, Credit Suisse said it would issue 3.8 billion francs in convertible bonds to existing investors such as Qatar and the Olayan Group, as well as new investors like Singapore-based Temasek.

The bank said it will also implement an exchange of SFr1.7 billion (£1.11 billion) of hybrid securities into contingent convertible notes (CoCos) to big player Olayan Group, originally planned for October 2013.

The chief executive also announced an extra SFr1 billion (£654.5 million) of cost cuts after the bank reached a 2013 target of slashing spending by SFr2 billion (£1.3 billion) early. Additional job cuts will come in from the investment banking and private banking units.

Under the original SFr2 billion (£1.3 billion) cost cut plan, Credit Suisse wanted to shed 3,500 positions. It said total staff numbers were down 1,500 from the end of 2011 to 48,200 at the end of June.

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