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BANKING

Credit Suisse taps shareholders for SFr1.7 billion after risk failures

Raising capital may have been painful, but it is the sensible thing to do. There were bigger surprises when the bank announced first-quarter results.

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Credit Suisse’s headquarters in Zurich. Photo: Credit Suisse

Several surprises came with Credit Suisse’s first-quarter results on Thursday.

First, the bank has raised SFr1.7 billion of capital through two roughly equal tranches of six-month mandatory convertible notes, the second of which was offered to existing shareholders.

A first tranche had already been placed with a select group of core shareholders, institutional investors and ultra-high-net-worth individuals. These underwrote the second tranche, so ensuring full proceeds, even if existing shareholders don’t take up their subscription rights.

With common equity tier-1 (CET1) down to 12.2% at the end of the first quarter, this deal adds 55 to 60 basis points of new capital. And with a capital gain of 25bp also to come from the IPO of Allfunds, this should take Credit Suisse up to a 13% CET1 ratio – and a 4% CET1 leverage ratio – at which level it intends to operate for the rest of this year.

The decision to issue mandatory convertible notes was taken by ourselves
Thomas Gottstein, Credit Suisse
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On the same day that the Swiss bank announced results, Credit Suisse’s home market regulator, Finma, announced enforcement proceedings against it over Archegos, having already announc,ed proceedings over Greensill.

The