New York October 31 2022: Credit Suisse (CSGN.S) on Monday unveiled details of its plan to raise 4 billion Swiss francs ($4.01 billion) from investors to support the embattled bank's bid to tackle the biggest crisis in its 166-year history.
Switzerland's second-biggest lender is raising new capital to fund an overhaul, which will see it cut thousands of jobs and shift its focus away from investment banking and towards the less turbulent area of wealth management.
Its reputation has been battered by a string of scandals and losses, including a $5.5 billion loss from the unravelling of U.S. investment firm Archegos, and it had to freeze $10 billion worth of supply chain finance funds linked to insolvent British financier Greensill.
The bank now is offering new and existing shareholders the chance to buy new shares in the lender.
It said new investors have committed to buying 462 million new shares at a purchase price of 3.82 Swiss francs ($3.83), equivalent to 94% of the volume weighted average price of Credit Suisse shares on Oct. 27 and 28, raising 1.76 billion Swiss francs.
Some 307.6 million of the new shares are expected to be bought by Saudi National Bank (1180.SE), giving it a 9.9% stake in Credit Suisse.
Existing investors meanwhile will get the chance to buy 889 million shares being offered at 2.52 francs per share, with subscription rights corresponding to the size of their present stake.
It is expected that seven pre-emptive subscription rights will entitle their holder to purchase two new shares at a 32% discount on the reference price, Credit Suisse said.
Both issues have to be approved at an extraordinary general meeting due to be held on Nov. 23.
If shareholders reject the plan, Credit Suisse said it would issue 1.8 billion new shares at an offer price of 2.27 francs per share, which would still enable it to raise 4 billion francs.
The bank has been pushing to sell assets to raise money and free up capital to try to limit how much cash it would have to raise, handle its legacy litigation costs and retain a cushion for rough markets ahead.
On Monday, Credit Suisse said it would act as its own global coordinator for the rights offering, while Deutsche Bank, Morgan Stanley, RBC Capital Markets and Societe Generale would be Joint Lead Managers and Joint Bookrunners.