The Saudis enter: the General Assembly of the Czech Republic approved the capital increase

23/11/2022, 11:0811/23/2022, 1:54 p.m

In financial trouble: Credit Suisse.Image: keystone

Credit Suisse shareholders held an extraordinary general meeting on Wednesday to discuss the acquisition approved new capital of approximately 4 billion Swiss francs. This means the Saudi National Bank may also join the ailing Swiss bank as a new major shareholder.

A two-stage capital increase proposed by the board of directors was accepted by shareholders with a clear majority, Credit Suisse announced on Wednesday. The event in Zurich was held without the presence of shareholders in person and was not broadcast online.

Subscription rights for shareholders

In the first step, shareholders approved a capital increase in the form of a private placement of up to CHF 1.77 billion with a majority of almost 92 percent in favor. The new shares will go to several qualified investors, including Saudi National Bank (SNB). They are taking over the shares at a purchase price of CHF 3.82 per share. The SNB will then hold a stake of just under 10 percent in Credit Suisse.

In the second step, 98.3 percent of ČS shareholders approved another capital increase, which should bring gross revenues of at least CHF 2.24 billion. Existing shareholders will receive subscription rights to purchase new ČS shares. According to CS, the subscription price per share is expected to be CHF 2.52. The exact conditions should be announced (tomorrow) on Thursday.

financial restructuring

Credit Suisse needs fresh capital to finance the sweeping restructuring announced at the end of October. It wants to significantly shrink its loss-making Investment Bank (IB), with parts of IB being sold or outsourced. In addition, it wants to significantly reduce the cost base, including by cutting 9,000 jobs. The bank expects restructuring and write-down costs of CHF 2.9 billion by 2024.

epa10269075 Screens show Credit Suisse CEO Ulrich Koerner presenting the bank's quarterly report and strategy and transformation plan during a webcast in Zurich, Switzerland...

Credit Suisse CEO Ulrich KoernerImage: keystone

At the same time, the bank is still deep in the red. On Wednesday morning, it announced a pre-tax loss of CHF 1.5 billion for the fourth quarter alone, as well as massive outflows from clients in asset management and other banking transactions. The big bank faces a pre-tax loss of up to CHF 3.4 billion for the full year 2022.

Lehmann sees progress

Chairman of the board Axel Lehmann nevertheless believed in himself on Wednesday. The result of the vote at the extraordinary general meeting is an important step and confirms the confidence in the strategy presented in October. Progress has also been made in recent weeks on the implementation of the strategy. “We are fully focused on delivering on our strategic priorities,” he said in a video message to shareholders.

Criticism of the Saudi National Bank’s entry from various quarters was not mentioned. Concerns about the new main shareholder were expressed in advance, mainly of an ethical nature. For example, representatives of the investor associations Actares and Ethos spoke out against the new anchor shareholder in various media. Questions submitted in advance by shareholders were only answered directly, a ČS spokeswoman said upon request.

Credit Suisse’s share price fell nearly five percent on Wednesday and was trading around 3.68 francs at midday. It is also well below the previously stated entry price for the Saudis. The big bank lost nearly 60 percent over the year. (aeg/awp/sda)

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