Credit Suisse Group (CSGKF) will make a decision on its capital raising plans “as soon as possible,” its chief executive said on Tuesday, without giving specific details on the timing or the type of fund-raising.
The bank upped its net loss for last year to 2.71 billion Swiss francs ($2.75 billion) from 2.44 billion. This cut its common equity tier 1 ratio, a measure of balance-sheet strength, heightening its need to raise capital
Switzerland’s second-biggest bank has said previously that its current plan is to raise up to 4 billion francs via an initial public offering (IPO) of a minority stake in its Swiss banking division.
However, the bank is also considering a quick-fire share sale at group level and its board of directors is set to decide in April how to proceed, Reuters has reported, citing sources.
“The answer is as soon as possible,” said Tidjane Thiam at the bank’s annual investment conference in Hong Kong, in response to a question on when the bank would take a decision on capital raising and what options were under consideration.
“We understand that the market needs clarity on that and we are very keen to give it,” he said. “We are working diligently but as you can imagine it’s a complex decision, we also wanted to take our time to make sure that we give a considered answer.”
Since taking over at Credit Suisse from British insurer Prudential in mid-2015, Thiam has been on a cost-cutting drive while shifting the bank’s business towards wealth management and putting less emphasis on investment banking.
Asia has become the centre-piece of Thiam’s strategy to turn the bank around. It has been one of the most aggressive foreign banks to expand its footprint in China, the world’s second-largest economy.
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“We are bullish on China, always have been, always will be, medium to long term. That doesn’t mean that China is immune to cycles to the world economy or commodity cycles, but we think the fundamentals are extremely positive,” he said on Tuesday.
But in the near-term, Credit Suisse would continue with its restructuring in the Asian equities business, which has weighed on the earnings of foreign banks due to tough market conditions, which will result in some reduction in headcount.
“The (equities) platform has to be of the size that’s commensurate with the demand today not with the demand in five years or 10 years,” Thiam said. “We have done some restructuring in Q1 more in Q2. Hopefully after that most of it will be done.”
($1 = 0.9855 Swiss francs)