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April 22, 2021, 3:45 p.m. EDT

Credit Suisse taps shareholders for cash as regulator investigates Archegos losses

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By Pierre Briançon

Swiss bank Credit Suisse said on Thursday it would sell convertible notes to its current shareholders in a bid to raise nearly $2 billion of fresh capital, to repair its balance sheet after losses triggered by the meltdowns of U.S. hedge fund Archegos Capital Management and British supply-chain finance group Greensill.

  • Swiss financial regulator Finma also said on Thursday that it had “opened enforcement proceedings” against the bank and will notably investigate “possible shortcomings in risk management” in the two financial scandals.

  • The bank said it had sold 203 million mandatory convertible notes to “a selected group of core shareholders” and institutional investors to shore up its capital base. The securities will convert into shares in six months.

  • Credit Suisse took a CHF4.4 billion write-down in the first quarter of the year, which led to a CHF757 million loss even as all other global investment banks reported record profits in the same period.

  •  “The loss we report this quarter (…) is unacceptable,” said Chief Executive Thomas Gottstein on Thursday.

  • Credit Suisse /zigman2/quotes/202835784/composite CS +0.19% shares fell 6% on Thursday. The price is now down 34% since early March, just before the revelation of the bank’s Greensill exposure.

Read: Credit Suisse executives grilled on Archegos losses. Here’s what they said.

The outlook: Credit Suisse has slashed bonuses, sacked executives and reduced risky activities after the twin debacles. It is in a leadership transition period: Gottstein has only been in the job for a year, and António Horta-Osorio, currently the Lloyds Banking Group /zigman2/quotes/200709414/composite LYG +0.78% chief executive, will be elected chairman of the Swiss bank next week.

/zigman2/quotes/202835784/composite
US : U.S.: NYSE
$ 10.39
+0.02 +0.19%
Volume: 7.31M
May 7, 2021 4:00p
P/E Ratio
23.58
Dividend Yield
0.99%
Market Cap
$25.72 billion
Rev. per Employee
$661,829
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/zigman2/quotes/200709414/composite
US : U.S.: NYSE
$ 2.59
+0.02 +0.78%
Volume: 4.37M
May 7, 2021 4:00p
P/E Ratio
40.47
Dividend Yield
1.23%
Market Cap
$46.16 billion
Rev. per Employee
N/A
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