Credit Suisse’s Re-organizational Cash Call Brings in $2.4 Billion

Credit Suisse
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Thursday was hailed as a “milestone” in Credit Suisse’s recovery strategy after the company raised 2.24 billion Swiss francs ($2.39 billion) as part of a capital call for 4 billion Swiss francs.

Shareholders exercised 98.4% of their subscription rights, providing a boost to management, which was entrusted with bringing the Swiss bank back on track following the worst crisis it had ever seen in its 166-year existence.

Ulrich Koerner, the CEO of the company, said in a statement that the successful completion of the capital increase was a very important step for the new Credit Suisse.

“It will enable us to further support our strategic initiatives from a position of capital strength,” he went on to say. “It will also help us build a simpler, more stable, and more customer-focused bank that meets customer needs while making money for shareholders.”

By the time Saudi National Bank took the helm of a group of institutional investors, Credit Suisse had already amassed 1.8 billion Swiss francs via the sale of shares (1180.SE).

Jerome Legras, who works with Axiom Alternative Investments, was quoted as saying that “the rights problem is the required start to the process.”

“However, this is simply the beginning of a difficult and protracted trip.”

Another fund manager says that the capital increase could make investors who are interested in risk buy more shares.

Stephen Sola, the founder of Sola Capital, stated that investors who are prepared to take risks would be encouraged to take a chance on the bank. He added that “management must deliver” in order to keep investors’ confidence.

After the exercise of subscription rights, there were only 16.4 million shares left unsold, and Credit Suisse said that these shares would be sold on the market at a price equal to or more than the offer price of 2.52 Swiss francs.

The 4 billion franc package is intended to fund a turnaround and strengthen Credit Suisse as it strives to move on from scandals and heavy losses that have prompted speculation about its future and led to large withdrawals by customers. The package will be used to fund the turnaround and strengthen Credit Suisse.

Credit Suisse has suffered a number of setbacks, the most recent of which was a $5.5 billion loss on the American investment company Archegos.

In addition to this, it was necessary to put a hold on supply chain financing funds worth ten billion dollars that were connected to the bankrupt British financier Greensill.

At the end of October, Credit Suisse said that it intended to eliminate thousands of employees and redirect its attention away from investment banking and toward wealth management, which is characterised by lower levels of volatility.

The president of Ethos, which represents shareholders holding more than 3% of Credit Suisse shares, Vincent Kaufmann, said that the company should now concentrate on its wealth management and Swiss arm.

“The top priority for the bank’s leaders should be to win back the trust of all of the bank’s stakeholders, not just the shareholders but also, and maybe more importantly, the bank’s customers and employees.”

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