Capital increase approved
ČS shareholders approve the Saudi investment
Credit Suisse gets new money – and a major Saudi shareholder: Shareholders approved an urgently needed cash injection and overwhelmingly approved a capital increase.
Now the National Bank of Saudi Arabia is one of Credit Suisse’s largest shareholders.
Christian KolbeEditor Economics
So now the Saudis are on board with Credit Suisse: At the big bank’s extraordinary general meeting, shareholders approved the entry of a few hand-picked new investors as well as a capital increase for all existing shareholders. This means that the Saudi National Bank will soon be one of the largest shareholders in the troubled Czech Republic.
Saudi Commercial Bank will own almost 10 percent of a major Swiss bank in the future. In a statement, CS Chairman Axel Lehman (63) thanks shareholders for their support for the urgently needed capital injection: “The approval of shareholders is an important milestone on the way to the new Credit Suisse.” Lehmann believes this result reflects shareholders’ confidence in the bank’s new strategy. “We are now focused on laying the foundations for future profitable growth with the implementation of the strategy.”
With the capital increase, the bank hopes to get around four billion from its shareholders. The ČS should announce the exact result of the capital measure on December 8.
Another billion dollar loss
The bank desperately needs fresh money: Credit Suisse will not get out of the red this year – on the contrary. A few hours before the extraordinary general meeting, the big bank announced how bad the bank is doing and that it expects further losses of billions in the last quarter. That would be the fifth straight quarterly loss.
Specifically, the minus before taxation could be up to 1.5 billion francs. This is due to difficult market conditions and ongoing losses in the investment bank. What the bank has to worry about: Customers continue to run away from CS.
And not only customers, but also shareholders. Shortly after the start of trading, ČS shares lost more than 4 percent. Even after the capital increase was approved, the price did not recover, falling almost five percent to CHF 3.67.
Another outflow of customer funds
Although the outflow of funds is no longer as high as in the first two weeks of October, asset management has not yet managed to stop these outflows either. Overall, the outflow of capital at the group level as of November 11, according to the ČS statement, amounted to approximately 6 percent of assets under management. Only in the Swiss bank did the situation almost stabilize, the loss of customer funds was one percent.
The group will continue its strategic transformation plan, which it launched in October, it said in a statement. It now expects further restructuring costs of around 250 million francs in the fourth quarter. Against this background, it is again clear how urgently the bank is dependent on four billion francs of capital increase. The bank’s shareholders will decide on this today at 10:30 a.m. at the extraordinary general meeting.