Credit Suisse is racing to complete sales of parts of its business that could limit the amount of funds it needs to raise from investors, a source with direct knowledge of the matter said, with just days to go before the bank unveils a restructuring plan. .
The plan is being closely monitored by Swiss financial market regulator Finma, which is in regular contact with the bank, a second source familiar with the matter said, highlighting the sensitivity of the reform.
With just a few days to go until the Oct. 27 announcement, it’s still unclear which businesses can be sold and for what price — critical pieces in a puzzle that will determine how much the bank may have to ask shareholders.
Analysts said the institution could need as much as 9 billion Swiss francs ($9 billion) as part of a reorganisation, some of the proceeds could come from investors and some from the sale of assets.
The bank’s management intends to sell business, such as securitized products, from its investment bank, the first source said, adding, however, that negotiations would likely take until the last minute before the restructuring is announced.
The bank recently launched a lawsuit that could lead to the sale of its US asset management arm, another source recently told Reuters, with initial expressions of interest expected later this week. However, there were no guarantees of a sale.
Credit Suisse is also considering spinning off part of its advisory and investment banking business, which could attract outside investors, Bloomberg reported.
If such deals fail to materialize or fall short of expectations, Credit Suisse will raise capital, the source said. The bank declined to comment, prior to its official announcement.
Free fall
Credit Suisse has hired Royal Bank of Canada to help organize a capital increase to support its finances and secure funds for restructuring, another person familiar with the matter said. Morgan Stanley is also working on the capital increase, the first source said.
In addition to attracting the scrutiny of Swiss regulators, the plan has drawn the attention of the country’s parliamentarians.
“I hope they announce that the American side of the business will be scaled back – US investment banking operations need to be scaled back,” said Thomas Matter, a senior lawmaker from the Swiss People’s Party, the country’s biggest party and a member of the ruling coalition. .
“I’m more concerned about Credit Suisse being bought at a bargain price by a US bank,” he said.
Ray Soudah, chairman of Swiss mergers and acquisitions firm Millenium Associates, said the divestitures risked making Credit Suisse “an even bigger target.”
“This will further decrease the value of the company because it reduces its revenue,” he said.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
