Credit Suisse is the latest lender to opt for a capital raise, which will generate nearly CHF 4.0 billion ($4.0 billion) via a rights offering. The latest effort represents a bid by the lender to help maintain parity with other European lenders in terms of capital, with other rivals already embarking on ambitious capital raises over the past five years.
No bank has been more focused on capital raises than Deutsche Bank in recent years, though Credit Suisse looks to be closing the gap with its latest $4.0 billion funding raise. Previous plans to float a minority state in its Swiss banking unit was ultimately scrapped however, according to a Reuters report.
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The news follows on the heels of a positive Q1 2017, which saw a net profit of $598.9 (CHF 596.0 million). The strength of the earnings helped calm an anxious investor base that is still reeling after a lackluster 2016. Credit Suisse leadership will likely use this as a carrot for its investor base that is calling for the resignation of the bank’s Chairman, Urs Rohner.
Despite the recent positive earnings, Credit Suisse has had to walk back some of its recent agenda, including a short-lived bonus hike that drew the ire of investors. Credit Suisse has since gone back on its bonus pool boost of 6.0 percent for personnel and leadership, with Chief Executive Officer Tidjane Thiam’s salary and overall compensation being reined in to CHF 10.24 million ($10.2 million).
According to a statement released from Credit Suisse regarding the raise: “We expect the capital increase will strengthen our pro forma look-through CET1 ratio to approximately 13.4 percent and our pro forma look-through tier 1 leverage ratio to approximately 5.1 percent, based on our end-1Q17 risk-weighted assets and leverage exposures.”