Credit Suisse shareholders greenlight $4.2 billion capital raise

Credit Suisse shareholders connected Wednesday approved a 4 cardinal Swiss franc ($4.2 billion) superior rise aimed astatine financing the embattled lender's monolithic strategical overhaul.

Credit Suisse's superior raising plans are divided into 2 parts. The first, which was backed by 92% of shareholders, grants shares to caller investors including the Saudi National Bank via a backstage placement. The caller stock offering volition spot the SNB instrumentality a 9.9% involvement successful Credit Suisse, making it the bank's largest shareholder.

SNB Chairman Ammar AlKhudairy told CNBC successful precocious October that the involvement successful Credit Suisse had been acquired astatine "floor price" and urged the Swiss lender "not to blink" connected its extremist restructuring plans.

The 2nd superior summation issues recently registered shares with pre-emptive rights to existing shareholders, and passed with 98% of the vote.

Credit Suisse Chairman Axel Lehmann said the ballot marked an "important step" successful the gathering of "the caller Credit Suisse."

"This ballot confirms assurance successful the strategy, arsenic we presented it successful October, and we are afloat focused connected delivering our strategical priorities to laic the instauration for aboriginal profitable growth," Lehmann said.

Credit Suisse connected Wednesday projected a 1.5 cardinal Swiss franc ($1.6 billion) loss for the 4th fourth arsenic it begins its 2nd strategical overhaul successful little than a year, aimed astatine simplifying its concern exemplary to absorption connected its wealthiness absorption part and Swiss home market.

The restructuring plans see the merchantability of portion of the bank's securitized products radical (SPG) to U.S. concern houses PIMCO and Apollo Global Management, arsenic good arsenic a downsizing of its struggling concern slope done a spin-off of the superior markets and advisory unit, which volition beryllium rebranded arsenic CS First Boston.

The multi-year translation aims to displacement billions of dollars of risk-weighted assets from the persistently underperforming concern slope to the wealthiness absorption and home divisions, and to trim the group's outgo basal by 2.5 billion, oregon 15%, by 2025.

'Too large to fail' but much transparency needed

Vincent Kaufman, CEO of the Ethos Foundation, which represents hundreds of Swiss pension funds that are progressive shareholders successful Credit Suisse, voiced disappointment up of Wednesday's ballot that the radical was nary longer considering a partial IPO of the Swiss home bank, which helium said would person "sent a stronger connection to the market."

Despite the dilution of shares, Kaufman said the Ethos Foundation would enactment the issuance of caller shares to existing shareholders arsenic portion of the superior raise, but opposed the backstage placement for caller investors, chiefly the SNB.

"The superior summation without pre-emptive rights successful favour of caller investors transcend our dilution limits acceptable successful our voting guidelines. I discussed with respective of our members, and they each hold that the dilution determination is excessively high," helium said.

"We bash favour the portion of the superior summation with preemptive rights, inactive believing that the imaginable partial IPO of the Swiss part would person besides been a anticipation to rise superior without having to dilute astatine specified a level existing shareholders, truthful we are not favoring this archetypal portion of the superior summation without pre-emptive rights."

At Credit Suisse's yearly wide gathering successful April, the Ethos Foundation tabled a shareholder solution connected clime strategy, and Kaufman said helium was acrophobic astir the absorption this would instrumentality nether the bank's caller large shareholders.

"Credit Suisse remains 1 of the largest lenders to the fossil substance industry, we privation the slope to trim its exposure, truthful I'm not definite this caller shareholder volition favour specified a strategy. I'm a small spot acrophobic that our connection for a much sustainable slope volition beryllium diluted among these caller shareholders," helium said.

Wednesday's gathering was not broadcast, and Kaufman lambasted the Credit Suisse committee for proposing a superior rise and entering successful caller outer investors "without considering existing shareholders" oregon inviting them to the meeting.

He besides raised questions astir "conflict of interest" among committee members, with committee subordinate Blythe Masters besides serving arsenic a advisor to Apollo Global Management, which is buying a information of Credit Suisse's SPG, and committee subordinate Michael Klein slated to caput up the caller dealmaking and advisory unit, CS First Boston. Klein volition measurement down from the committee to motorboat the caller business.

"If you privation to reconstruct trust, you request to bash it cleanable and that's wherefore we're inactive not convinced. Again, a stronger connection with an IPO of the Swiss home slope would person reassured astatine slightest the pension funds that we are advising," helium said.

However, Kaufman stressed that helium was not acrophobic astir Credit Suisse's semipermanent viability, categorizing it arsenic "too large to fail" and highlighting the bank's beardown superior buffers and shrinking outflows.