Credit Suisse intends to raise capital for as much as $4.05bn. The firm also plans to radically restructure its investment bank. They believe that this approach might be able to revive the CS First Boston brand. It spins off their capital markets as well as advisory business radically. The firm’s three-year plan is to have a simpler, more focused and stable bank after the previous scandals. The core business would be to take care of wealth management and the Swiss bank. This is using the strength they own in the market areas and asset management. The company also plans to cut 2.700 jobs.
One of the many strategies is that the firm would transfer a securitised products business a significant portion to an investor group. The leader is Apollo Global Management. They also plan to set up a non-core unit that will run down the unwanted assets. Based on the information, Credit Suisse would finance as well as rebuild major overhaul and capital strength. They come up with a total of SFr4bn capital. This is going through a rights issue and the sale of SFr1.5bn of shares to Saudi National Bank, that gives around 9.9% stake.
The purpose is to cut the risk-weighted assets around 40% by 2025 in the investment bank. The firm argued that CS First Boston is going to be more broader and global than boutiques. However, they are going to focus more on the bulge bracket players. Meanwhile, CS First Boston in New York headquarters expects to get long-term partnership with Credit Suisse but they could also attract third-party capital. So, this firm would focus on the competitive market and attracting investors.