Credit Suisse is trying to reassure investors with a $3 billion debt buyback

Credit Suisse is trying to reassure investors with a $3 billion debt buyback
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ZURICH, Oct 7 (Reuters) – Credit Suisse (CSGN.S) will buy back up to 3 billion Swiss francs ($3 billion) in debt, the ailing Swiss bank said on Friday, showing strength as it tried to calm investors after a turbulent week.

The move reduces the Swiss bank’s debt burden and is a bid to boost confidence following the sharp fall in share prices and bonds. Unfounded rumors that his future was in doubt circulated on social media amid fears it might need to raise billions of francs of fresh capital.

As one of the largest banks in Europe, Credit Suisse has had to raise capital, halt share buybacks, cut its dividend and reshuffle management after losing more than $5 billion to the collapse of investment firm Archegos in March 2021, when it also had one Clients had to suspend funds linked to failed financier Greensill.

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The bank said the debt buyback would “allow us to take advantage of market conditions to buy back debt at attractive prices.” Its shares were up 1.5% in premarket activity on the Swiss stock exchange, suggesting some relief from investors.

“It’s an opportunistic move to take advantage of market conditions that might be reassuring for some investors,” said Vontobel analyst Andreas Venditti. “If bought below par, there is a profit that slightly increases capital.”

Bank executives spent the weekend reassuring major customers, counterparties and investors about their liquidity and capital. CEO Ulrich Körner also informed the employees in a memo that he had sufficient capital and liquidity. Continue reading

Earlier this week, in an unusual move, the Swiss National Bank, which oversees the financial stability of systemically important banks in Switzerland, said it was monitoring the situation at Credit Suisse.

Banks and banking groups are considered systemically important if their failure would cause significant damage to the Swiss economy and the financial system.

Credit Suisse announced that it has accepted a €1 billion cash offer in respect of eight euro or sterling-denominated senior notes and a further offer to repurchase 12 US dollar-denominated senior notes for up to US$2 billion. dollars submitted.

The bank will present its new business strategy on October 10th. 27 when it announces third-quarter results.

Rating agency Moody’s Investors Service expects losses for Credit Suisse to soar to $3 billion by the end of the year, potentially taking its core capital below the key 13% mark, Moody’s chief analyst at the bank told Reuters on Thursday. Continue reading

The bank has been working on potential asset and company sales in a bid to return to profitability.

It has also announced plans to sell its famous Savoy Hotel in the heart of Switzerland’s financial district, a deal that could fetch around 400 million francs, according to local media. Continue reading

($1 = 0.9897 Swiss francs)

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writing by John Revill and John O’Donnell; Editing by Edwina Gibbs and Mark Potter

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