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Credit Suisse raises $4.3 billion in capital after wild ride


(Bloomberg) — Credit Suisse Group AG has completed a two-way capital raise of 4 billion francs ($4.3 billion), giving Chief Executive Officer Ulrich Koerner the capital needed to embark on the restructuring. comprehensive structure of lending institutions is in trouble.

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Credit Suisse said in a statement late Thursday that investors had agreed to buy 98.2% of the shares being sold in a rights offering to raise 2.24 billion francs. The remainder of the shares will be sold on the market at or above the asking price of 2.52 francs a share.

Issuing rights is the second step in the bank’s capital raising process. The Zurich-based company, which raised 1.76 billion francs through a private placement last month to investors including the National Bank of Saudi Arabia, will become the largest shareholder with just less than 10%.

Shares were up about 3.5% in early Zurich trading on Friday.

Credit Suisse is consolidating its financing to assuage investor concerns following billions of dollars in losses over the past two years, recent customer withdrawals and asset outflows. The funds will help pay for the exit from most investment banking and the cutting of 9,000 jobs. Wracked with years of scandals and mistakes, Credit Suisse has warned of its fifth consecutive quarter of losses.

The signing-rights offer signaled the end of a frantic ride for shares in the Swiss bank that’s been struggling in recent weeks, at one point when a 13-day losing streak sent shares Coupon near the price is said to be a highly discounted offer. Chairman Axel Lehmann’s comments on December 2 that the bank had stopped massive outflows provided some relief.

“The successful capital raise is an important milestone for the new Credit Suisse,” Koerner said in a statement. “That 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 the needs of our customers. customer demand.”

A rights issue is an offering of shares to existing investors to enable them to purchase shares in proportion to their holdings at a discounted price. Winning the right to compensate investors for dilution that occurred during the fundraising process.

Last week, shares fell to a record low of around 2.67 Swiss francs, just above the 2.52 franc price for subscription rights that Credit Suisse offers to existing investors. The bank has priced it at a discount of about 32% from share value after presenting its strategy in October.

The bank said the right preference would strengthen the CET1 ratio, a key measure of financial strength, by about 140 basis points. It also said the cost-saving measures it has begun account for about 80% of its plan to reduce 1.2 billion francs in its 2023 cost base.

The rights issue is fully underwritten by about 20 banks led by Deutsche Bank AG, Morgan Stanley, RBC Capital Markets and Societe Generale SA.

(Updated with sharing in fourth paragraph)

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