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Credit Suisse working with RBC, Morgan Stanley on potential capital increase


The Zurich-based bank is working with Royal Bank of Canada and Morgan Stanley to raise potential funds.

• Credit Suisse Group AG executives are probing every corner of the business for ways to raise funds

With just over a week until the unveiling of its significant turnaround plan, executives at Credit Suisse Group AG are probing every corner of the business for ways to raise money – and to outside investors if they need more. Preparing to tap.

The Zurich-based bank is working with Royal Bank of Canada and Morgan Stanley on a potential capital increase it needs to raise funds for its restructuring, according to people familiar with the matter. Those discussions supported efforts to settle certain areas of the business, which are likely to involve large portions of investment banks and potential asset management in the US.


People said the capital increase, which the bank is exploring as "Project Ghana", could come after the bank's formal restructuring announcement on October 27.

After years of scandals and multi-billion-dollar losses, investors have little certainty on how much it will cost to restore confidence in the historic Swiss firm to Chief Executive Officer Ulrich Körner. Analysts estimate between $4 billion and $8 billion, although executives may initially try to keep that figure low in times of volatile markets and gloomy valuations.

If Credit Suisse were to pull the trigger on the capital increase, it would seek restructuring and at least $2 billion over the next few years to cover any operating losses as it impacts the business, the people said.

Analysts at KBW, including Tom Hallett, wrote in a note, "A capital 'hole' of 6 billion francs needs to be plugged to restructure operations, absorb regulatory requirements, support growth and buffer against unknowns." " "We do not believe this is possible purely through asset sales, especially in the current environment."

Morgan Stanley, Royal Bank of Canada and Credit Suisse declined to comment. Shares of Credit Suisse rose up to 4.3% on Tuesday and were up 1.8% to 4.62 Swiss francs as of 5:25 p.m. In Zurich, investors may see the suggestion that raising capital is thinner than some expected.

Credit Suisse has already reached out to Qatar Investment Authority and others to take an interest in a potential capital injection, people familiar with the matter said earlier. Other Middle Eastern funds, such as Abu Dhabi's Mubadala Investment Company and Saudi Arabia's Public Investment Fund, are weighing whether to put the money into their investment banking branch or other businesses, the people said.

Credit Suisse has long counted wealthy Middle Eastern investors as top shareholders, including QIA and Saudi Arabia's Olayan Group. They have often invested in times of need, including QIA's participation in Credit Suisse's nearly $2 billion convertible note issuance in April 2021. That helped shore up the balance sheet after Arcgos.

Goldman Sachs Group Inc. Analyst Chris Hallam said last week the bank could face a shortfall of at least 4 billion Swiss francs to pay for its restructuring, when capital production has been muted. He said the total requirement could be as much as 8 billion francs.

In line with next week's announcement, the bank is accelerating its plans on asset settlement, including a possible partial sale of its securitized products unit. That business is attracting interest from an investor group including PIMCO, Sixth Street and Centerbridge Partners, people with knowledge of the matter have said.

The bank is also seeking to bring in an outside investor to fund a possible spinoff of its advisory and investment banking businesses. The separation of the dealmaking and underwriting unit would effectively break the troubled investment banking division into three pieces.

In addition to the investment bank, Credit Suisse is also looking to sell its US asset-management operations. No final decision has been made and Credit Suisse may choose to hold the entity, the people said, seeking anonymity to discuss internal views.

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