Credit Suisse brought months of uncertainty to an end: the Swiss bank will tap shareholders for a 4 billion franc cash call and abandon plans to list its Swiss unit.
Zurich-based Credit Suisse said on Wednesday it will issue 379,981,340 new shares in order to raise 4 billion Swiss francs from shareholders. The move will vault the Swiss bank's depleted capital to over 13 percent, from 11.7 percent currently.
The move, days before a landmark shareholder meeting, ends months of uncertainty at Credit Suisse's Swiss bank, where preparations to list a minority stake had been proceeding full steam ahead until today. Credit Suisse will keep full ownership of the unit, a reliable generator of profits.
«We believe that keeping 100 percent of our valuable Swiss bank, while raising capital through a rights offering with preemption rights, is the right course of action and will result in significant value creation for shareholders over time,» chairman Urs Rohner said.
All-Cash Payouts
Chief Executive Tidjane Thiam cited Credit Suisse's improved health and ability to stow capital out from profits to justify his reversal in strategy, as well as of course the cash call.
«The comprehensive set of capital management actions proposed aims ultimately to reverse the decline in the tangible book value per share that Credit Suisse has experienced over the past years and lays the foundations for the bank to accrete capital and return it to shareholders over time,» the bank said in a statement.
Credit Suisse, which has often paid so-called scrips or share-based dividends in recent years instead of cash, will move to all-cash payouts, the bank said. This year's dividend will be roughly in line with last year's 0.70 francs per share payout, the bank said.
Stiff Opposition
The raft of measures is aimed at appeasing angry shareholders, who have lost out considerably with Credit Suisse stock under Rohner's leadership. On Friday, the bank is set to face opposition from shareholders and advisor groups such as Institutional Shareholder Services.
The capital steps come alongside a first quarter net profit of 596 million francs in the first quarter, from a 302 million franc year-ago loss. The bank voiced a cautious outlook, but said it had seen inflows of client money into its Swiss bank, wider private bank, and Asia-Pacific activities.
