Credit Suisse aims to boost capital to SFr8.7bn

CREDIT SUISSE is bolstering its capital position to address damaging concerns expressed by the Swiss central bank last month, as well as seeking a further one billion Swiss francs of cost savings by the end of 2013.

Switzerland’s second-largest bank by assets yesterday said it would increase its capital by SFr8.7 billion through a series of immediate actions, including the issue of convertible bonds worth SFr3.8 billion. It said it would also strengthen its capital position by a further SFr6.6 billion by the end of 2012, partly by selling part of its private equity business.

Chief executive Brady Dougan said: “The capital measures that we announced today take any question of the strength of our capitalisation off the table.”

Shares in Credit Suisse tumbled by 10 per cent last month on the day that the Swiss National Banks financial stability report said it was not carrying enough of a capital buffer, given the risks presented by the euro zone debt crisis.

Credit Suisse chairman Urs Rohner said: “Unquestioned capital strength is of paramount importance to the group. Given the current environment, we decided to accelerate the implementation of our capital plans in a manner which eliminates any doubts raised by the 2012 SNB financial stability report.”

The convertible bonds – which are due to convert into shares in March 2013, or earlier if the need arises – are being sold to existing and new shareholders, including sovereign wealth funds from Qatar and Singapore.

The bank said the moves would increase its core capital ratio from a projected 7 per cent at the end of 2012 to 9.4 per cent, close to the 10 per cent level target imposed for the end of 2018 by new rules.

Credit Suisse said it had increased its cost reduction target for the end of 2013 from SFr2 billion to SFr3 billion, having achieved the former figure 18 months early. The bank declined to say how many more jobs would be lost.

It also issued a preview of its second-quarter results, showing net profit of SFr788 million and a 9.2 per cent return on equity.

Shares in Credit Suisse rose 4.7 per cent to SFr17.94 in early trading yesterday, although they are still down by more than a third over the past year. – Copyright The Financial Times Limited 2012