UPDATE 3-Credit Suisse Unveils Details of $4 Billion Fundraising Plan

(Add stock price reaction, analyst comment, details)

By John Revil

ZURICH, Oct 31 (Reuters) – Credit Suisse on Monday unveiled details of its plan to raise 4 billion Swiss francs ($4.01 billion) from investors to back the beleaguered bank’s bid to cope to the biggest crisis in its 166-year history.

Switzerland’s second-biggest lender is raising new capital to fund an overhaul, which will see it cut thousands of jobs and shift away from investment banking into the less turbulent realm of wealth management.

His reputation was tarnished by a series of scandals and losses, including a loss of $5.5 billion due to the dismantling of the American investment company Archegos, and he had to freeze $10 billion in financing funds from supply chain linked to insolvent UK financier Greensill.

The bank now offers new and existing shareholders the opportunity to purchase new shares.

He said new investors have committed to buy 462 million new shares at a purchase price of 3.82 Swiss francs ($3.83), or 94% of the volume-weighted average price of the shares of the Credit Suisse on October 27 and 28, raising 1.76 billion Swiss francs. .

Some 307.6 million of the new shares are expected to be purchased by Saudi National Bank, giving it a 9.9% stake in Credit Suisse.

Existing investors will have the opportunity to purchase 889 million shares offered at 2.52 francs per share, with subscription rights corresponding to the size of their current holding.

It is expected that seven preferential subscription rights will allow their holder to buy two new shares at a discount of 32% on the reference price, said Credit Suisse.

The bank’s shares opened 3.2% higher in Switzerland at 40.55 Swiss francs. They are down about 55% this year.

Both issues must be approved at an extraordinary general meeting to be held on November 23. The final terms of the rights issue are expected to be announced the following day.

If shareholders reject the plan, Credit Suisse has announced that it will issue 1.8 billion new shares at an offer price of 2.27 francs per share, which would still allow it to raise 4 billion francs.

“We assume that the offering to qualified investors will take place and that the number of CS shares will increase from the current 2.6 billion to 4.0 billion,” analysts at Bank Vontobel said.

“In our financial model, we had increased the number from 2.6 billion to 3.6 billion in September. We will have to increase it to 4 billion.”

JP Morgan analysts said the capital increase would result in a 27% total dilution of economic earnings from Credit Suisse shares.

The bank has pushed to sell assets to raise funds and free up capital in an attempt to limit the amount of cash it needs to manage its legacy litigation costs and maintain a cushion for tough markets ahead.

On Monday, Credit Suisse said it would act as its own global coordinator for the rights offering, while Deutsche Bank, Morgan Stanley, RBC Capital Markets and Société Générale would act as co-managers and co-runners. of books.

ABN AMRO in cooperation with ODDO BHF SCA, Banco Santander, Bank of America, Barclays, BNP Paribas, Citi, Commerzbank, Crédit Agricole CIB, Goldman Sachs International, ING, Intesa Sanpaolo, Keefe, Bruyette & Woods, Mediobanca, SMBC Nikko Capital Markets , Wells Fargo Securities International are acting as joint bookrunners. ($1 = 0.9972 Swiss francs) (Reporting by John Revill, editing by Miranda Murray, Kirsten Donovan and Jane Merriman)

Previous Smaller Financial Banks' Capital Raising Accelerates in Q2 FY23: CareEdge Analysis
Next Capital-raising by small financial banks accelerates in the second quarter: report