Swiss bank shares fall amid capital increase plans and weak earnings report this week
Logo of Swiss bank Credit Suisse in Zurich
(Photo: Arnd Wiegmann/Archyde.com)
Shares in Swiss bank Credit Suisse fell 2.28% to hit a record low of CHF 3.47, according to trading data on the SIX Swiss Exchange. The previous anti-record was set on October 3, when Credit Suisse shares fell in price to 3.52 Swiss francs during trading.
As of 14:27 Moscow time, the decline has slowed to 1.4%, and shares were trading at 3.501 Swiss francs.
The sell-off in Credit Suisse began following the bank said it expects a pre-tax loss of 1.5 billion Swiss francs ($1.6 billion) in the fourth quarter as it undertakes a massive strategic restructuring of the business. The bank also reported a continued decline in deposits and assets under management.
On Wednesday, November 23, Credit Suisse shareholders at an extraordinary meeting approved a 4 billion Swiss franc ($4.20 billion) share capital increase to finance the recovery of the business from the biggest crisis in its 166-year history. For this plan voted more than 90% of shareholders.
The next day it was announced that the bank would offer existing investors 889 million new shares at a price of 2.52 Swiss francs ($2.67) per share. The share issue is expected to raise regarding CHF 2.24 billion, informed Archyde.com with reference to Credit Suisse.
Shareholders will receive one preemptive right to subscribe for each share they held on November 25th. The seven rights will allow the holder to purchase two new shares at a reduced price of 2.52 francs per share. The offer will be valid from November 28 until 12:00 (14:00 Moscow time) on December 8.
Switzerland’s second largest bank also confirmed that it has placed 462 million new shares for qualified investors. The largest share was bought by the National Bank of Saudi Arabia – 307 million new shares, receiving a share of 9.9%. Thus, he became the largest investor.
All proceeds will go to the restructuring of Credit Suisse, which includes the abandonment of investment banking activities.
Credit Suisse ended the third quarter of 2022 with a loss of 4 billion Swiss francs ($4.1 billion). As part of the restructuring, by 2025 the bank will fire regarding 9,000 employees. The cost of the new strategy, which includes a “radical restructuring” of its investment arm, is expected to cost the bank nearly CHF 3 billion through 2024.
