Most bankers at Credit Suisse don’t expect the planned IPO of the Swiss business to ever take place. Which puts them in a rather awkward situation when they meet clients.
The initial public offering of the Swiss business that Credit Suisse (CS) mooted not that long ago seems to have become obsolete. Hundreds of employees are still working on the mega-project and the bank officially keeps all options open.
But hardly anybody within the bank expects it to happen anymore, employees told finews.com in discussions in recent days. There are several reasons why CS bankers don't believe in the IPO anymore.
Indications for Capital Increase
First and foremost, in the past week there have been indications that CS is looking for ways to raise cash on the capital markets by selling stock, «Bloomberg» and «Reuters» reported. And Chief Executive Tidjane Thiam has been saying as much in an interview with «Finanz und Wirtschaft» business paper a week ago.
Secondly, CS Switzerland boss Thomas Gottstein hasn’t appeared in public for weeks. If the bank still harbored plans to put his business up for partial sale to the public, it wouldn’t make too much sense to disappear from the screen at this stage.
Excessive Salaries
The staff who had been told how beneficial the transaction would be are thus left in limbo, which makes it particularly difficult for the employees with customer exposure, people at the company told finews.com.
While they for months had told clients that a partial IPO would be for the very best of the bank, that it would create a new strong Swiss banking institute, they now face the situation that they have to retract, which doesn’t strengthen their position much.
And their difficulties have been helped much by reports on Friday about the excessive salaries being paid to the executive and supervisory boards – remuneration packages that beggar belief in times of hefty losses.
Credibility Gap
Companies sometimes are forced to reconsider their strategic decisions. But in doing so, they have to keep their credibility in mind.
More and more, questions are being asked why CS mulled the partial IPO in the first place, a transaction of highly complex nature. Many issues had been left open such as duplications, governance, areas of responsibility, independence of the newly released unit, rights of minority shareholders – a list that seems endless.
Industry sources currently are suggesting that CS maybe didn't want to communicate from the beginning the possibility of a second, foreseeable capital increase. If CS had said before the first capital increase that it intended to ask for a second round soon, it definitely would have endangered the first one (dilution of earnings).
This is all speculation of course. But for the sake of staff and shareholders it would be helpful if the management came clean about its intentions in relation to the IPO soon.
