Credit Suisse, battered by years of scandals, plans to raise 4 billion Swiss francs ($4 billion) by selling stock while slashing thousands of jobs and spinning off its investment bank in an effort to recover from a run of heavy losses.
The troubled Swiss bank outlined what its chairman Axel Lehmann dubbed a "blueprint for success", after racking up a 4 billion Swiss franc loss in the third quarter of the year and following torrid weeks for the group. The announcement fell flat with investors and the bank's stock, which has plumbed record lows in recent weeks, dropped 7.3 percent in early trading.
Credit Suisse clients pulled funds in recent weeks at a pace that saw the lender breach some regulatory requirements for liquidity, the bank said on Thursday, underscoring the impact on its business of wild market swings and a social media storm.
The turnaround plan has many elements, from cutting jobs to refocusing on banking for the wealthy. It will cut 2,700 jobs or 5% of its workforce by the end of this year, and ultimately reduce its workforce by roughly 9,000 to about 43,000 by the end of 2025.
The Swiss bank said it also aims to separate out its investment bank to create CS First Boston, focused on advisory and capital markets, and hopes to attract third-party capital and set up a partnership with the new Credit Suisse. Saudi National Bank, the Kingdom's biggest lender, committed to invest up to 1.5 billion francs in Credit Suisse to achieve a shareholding of up to 9.9% and may may invest in the spun-off investment bank, the Saudi lender said in a bourse filing.
Credit Suisse said it will create a capital release unit to wind down non-strategic, higher-risk businesses, while announcing the sale of a large part of its securitised products business.
JPMorgan analysts said that "question marks remain" over the restructuring of investment banking, adding that the share sale will also weigh on the stock.
The bank's overhaul, aiming to put behind it the worst crisis in its history, is the third attempt in recent years by successive CEOs to turn around the embattled group.
Once a symbol for Swiss reliability, the bank's reputation has been tarnished by a series of scandals, including an unprecedented prosecution at home involving laundering money for a criminal gang.
