Credit Suisse is reportedly considering viable alternatives to ramp up its capital to nearly USD 1.04 billion following recurring losses that have caused financial turmoil for the business.

Sources claim that the cash inflow will help the bank avoid billions of dollars in losses in 2021 because of a series of spoilt investments. Furthermore, expensive legal battles, including a Bermuda court case, could end up costing the bank nearly USD 600 million.

It is worth noting that the bank has been attempting to reform its risk management culture as well as undo the damage done by a series of improprieties that have resulted in management chaos, unexpected resignations, and numerous investigations.

While it was the preferred choice to sell shares of some of its major investors, the bank stated that it will not suggest increasing equity capital because its balance sheet demonstrates no requirement for equity.

It is also possible that it will sell a portion of its division, such as asset management; however, no decision has been made, and any transaction would most likely take place in the second half of the year.

Notably, the deliberations about a capital gain are being held only because the bank recently raised USD 1.8 billion from investors through mandatory convertible notes.

According to reports, the shares of Credit Suisse fell 4.2% by 1000 GMT, while the Swiss blue-chip index fell 0.7% and the European banking index fell 0.9 %.

Despite the current actions, Switzerland’s second-largest bank had previously stated that it will not involve new capital even after disclosing a net loss for the first quarter, which is what probably put more financial strain on the bank.

Raising new capital, on the other hand, would send a powerful signal, indicating that investors putting new money in the bank can be viewed as a show of faith.

Source credits –

https://money.usnews.com/investing/news/articles/2022-05-30/exclusive-credit-suisse-weighs-options-to-strengthen-capital-sources