The announced capital injection from Credit Suisse is not only supported by the Saudis and Qataris. It is rumored that a Swiss group also wants to get involved in a big way. But the trail is still scattered.
On November 23, the hard-pressed shareholders of Credit Suisse (CS) will vote on another capital increase for the struggling big bank: CHF 1.76 billion worth of shares are then to be issued.
In addition, there is another CHF 2.24 billion that CS wants to import through subscription rights. In total, the bank’s management hopes for revenues of 4 billion francs to finance the restructuring of the company and to increase the capital base. The common equity ratio (CET1) fell from 13.5 to 12.6 percent in the last third quarter. 10 percent is the regulatory minimum.
It is already clear that the state-owned Saudi National Bank (SNB) wants to get CHF 1.5 billion from this. A report from the usually well-informed Financial Times (article subject to payment) According to the report, the sovereign wealth fund of Qatar (QIA) also wants to increase its stake. More money should finally come from a “Swiss group,” according to the newspaper. However, according to the report, it is not a competing bank.
But who else? CS refused to comment on the question. In the banking sector, on the other hand, there is lively discussion about which major local investors could take center stage on November 23. finesse.ch tested four scenarios for their plausibility.
1. On the trail of allfinanz
Screenplay: Swiss insurance companies have the necessary money and a long-term horizon to dare to make a large investment in the Czech Republic. Operational considerations could also play a role here: ever since financial managers understood their business as an “ecosystem”, bancassurance partnerships between banks and insurance companies have become socially acceptable again in this country. It makes sense that it was CS who thoroughly demystified the term “allfinanz” before. The merger with Winterthur Versicherungen (now Axa) in 1997 ended in a bad flop in the noughties.
Plausibility check: From the point of view of a long-term institutional investor, entering CS could make sense both as a financial investment and because of possible operational synergies. However, most of the major insurance companies in this country are listed on the stock exchange. Given the size of the deal, they should inform investors of their intentions at an early stage. This speaks against this scenario.
2. In the crosshairs of financial investors
Screenplay: Private market firms invest for a much shorter time horizon. They too could show interest in the CS “turnaround case”. All the more so since the private equity market currently lacks big targets. They would, however, provide the board of directors and the strategy of the head of the CS with great certainty Ulrich Korner may want to speed up. Its return target of 6 percent by 2025 is considered insufficient to bring the bank’s cost of capital.
In the financial center, the names of the private market specialist Zug Partners Group and the Swiss branch of the Swedish activist Cevian are put into play.
Plausibility check: Partners Group on request finesse.ch do not comment on possible engagements. However, the asset manager very rarely invests in listed companies like CS. Likewise, it does not sound plausible that the management of the bank would also bring in an activist financial investor despite all the enormous challenges.
3. Sentimental Mäzen
Screenplay: It is an open secret that a major bank could rely on the commitment of wealthy private customers and family offices for a capital injection after the Archegos debacle in April 2021. However, those familiar with the scene are of the opinion that these players are holding back this time due to the expectation that CS will not be able to recoup its capital costs in the medium term. Family officers are good at arithmetic.
On the other hand, one or more very wealthy patrons could be persuaded to donate a few million given CS’s history as a pioneer of Swiss banking. A medical billionaire and self-willed American is brought into play here Hansjörg Wyss, who is known to have been or still is a customer of the bank. At least Wyss does not oppose Swiss financial firms. Two years ago, he surprisingly joined the Bellevue Group in Zurich.
Plausibility check: One can imagine the involvement of several very rich individuals in CS. But only if they are not looking for short-term returns.
4. «Switzerland Ltd» will be incorporated
Screenplay: It was criminal that the federal government, the authorities, but also Swiss CS companies only looked on – and left the rescue of a systemically important bank to actors from the Middle East, he commented finesse.ch recently. However, some businessmen may have secretly concluded that Switzerland needs two large international banks.
Plausibility check: In the field of corporate loans, CS is the leading bank in the country, so it cannot be replaced so quickly. This shows the interest of “Switzerland AG”. In the future, however, the role of an alternative to UBS for Swiss exporters could be taken over by Deutsche Bank with its international network. Another argument against involving a group of companies is that such action would be difficult to coordinate and even more difficult to conceal.
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