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Credit Suisse completed a Sf4bn ($4.3bn), two-pronged capital increase, giving CEO Ulrich Koerner the funds needed to embark on a comprehensive restructuring of the troubled lender.
Investors agreed to buy 98.2% of the stock on sale in a rights offer to raise Sf2.24bn, Credit Suisse said in a statement late on Thursday. The remainder of the stock will be sold in the market at or above the offer price of Sf2.52 a share.
The rights issue was the second leg of the bank’s capital raising. The Zurich-based firm already raised Sf1.76bn through a private placement in November to investors including Saudi National Bank, which will become the largest shareholder with just under 10%.
The stock gained about 3.5% in early Zurich trading on Friday.
Credit Suisse is shoring up its finances to assuage investors’ concerns after billions in losses over the past two years, recent client defections and asset outflows. The funds will help pay for the exit from large parts of its investment bank and 9,000 job cuts. Reeling from years of scandals and missteps, Credit Suisse has warned of a fifth straight unprofitable quarter.
The concluded rights offer spells the end of a wild ride for the troubled Swiss bank’s stock over the past weeks, when at one point a 13-day losing streak took the shares near the price of what was supposed to be a heavily discounted offer. Comments by chair Axel Lehmann on December 2 that the bank had stopped huge outflows provided some relief.
“The successful completion of the capital increase is a key milestone for the new Credit Suisse,” Koerner said in the statement. “It will allow us to further support our strategic priorities from a position of capital strength and create a simpler, more stable and more focused bank built around client needs.”
A rights issue is an offering of shares to existing investors to allow them to buy shares in proportion to their holding at a discounted price. Taking up the rights compensates investors for the dilution that occurs in a capital raising.
Last week, the shares fell to a record low of about Sf2.67, just above the price of Sf2.52 for subscription rights that Credit Suisse offered existing investors. The bank had set the price at a discount of about 32% to its stock value after the strategy presentation in October.
The bank said the rights offer will strengthen its CET1 ratio, a key metric of financial strength, by about 140 basis points. It also said cost savings measures it’s already started represent about 80% of the planned Sf1.2bn reduction in its 2023 cost base.
The rights issue was fully underwritten by about 20 banks led by Deutsche Bank, Morgan Stanley, RBC Capital Markets and Societe Generale.
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