Credit Suisse completes 4 billion raise; Saudis become largest holder

By Alessandro Albano

Investing.com - Credit Suisse (SIX:CSGN) has completed a CHF 4 billion ($1=CHF0.9333) two-stage capital increase, giving CEO Ulrich Koerner the funds needed to proceed with the complicated restructuring plan that includes, among other things, the spin-off of the investment division.

Investors bought 98.2% of the shares as part of a rights offering, raising a total of CHF 2.24B, a statement from the bank said, while the unopted shares will be sold in the market at a price "equal to or higher than" the offering price of CHF 2.52 per share.

The raising is in addition to the CHF 1.8B secured through an earlier share placement by a consortium of institutional investors led by Saudi National Bank, the national bank of Saudi Arabia that is now set to become the Swiss bank's largest shareholder.

According to a document filed with the Swiss Stock Exchange, as of December 8, the Riyadh-based bank owns 12.7% of Credit Suisse's capital, which is followed by another Gulf Arab entity - Qatar Holding LCC, directly controlled by the national sovereign wealth fund Qatar Investment Authority, with 5.03%.

As a reminder, the Saudi Arabian bank is more than 37%-owned by the Public Investment Fund, Saudi Arabia's sovereign wealth fund, which, according to a WSJ rumor, has its eye on CS First Boston, the new investment bank of Credit Suisse created by a spin-off.

Sources close to the matter told the newspaper that Prince Mohammed is reportedly considering an investment of about $500M in the new merchant bank, which could be joined by banker Bob Diamond's Atlas Merchant Capital.

It is an interference that could create some belly-aching in the European banking system but, for now, has assured the Swiss bank that it can go ahead with operations even if, as Credit Suisse Chairman Axel Lehmann said, it will take about two years for CS First Boston to become fully independent, with analysts predicting a "long and complex" process.

On the cost side, the bank's restructuring is proceeding. As confirmed by the institution itself, the measures on expense reduction initiated as of Dec. 8 represent 80% of the cost base reduction target for 2023, amounting to about CHF 1.2B.

The success of the capital raise marks the end of a downward run for the bank's stock that lasted 13 consecutive sessions, which brought the market valuation down to less than $12.7B equal to a price of CHF 2.99 per share compared to CHF 6.22 per share six months ago.

Translated from Italian.