June 19, 2024

(Bloomberg) — On the face of it, it was almost a good week for Credit Suisse Group AG, the stock recording its biggest gain in two years.
Most Read from Bloomberg
Biden Says Putin Threats Real, Could Spark Nuclear ‘Armageddon’
Biden Should Hit Saudi Arabia Where It Really Hurts
Stock Traders Hit Sell Button on Hawkish Fed Bets: Markets Wrap
Facebook Is Warning 1 Million Users About Stolen Usernames, Passwords
NATO Once Feared a Putin Victory. Now It Worries Over His Defeat
But that glosses over a rollercoaster ride that saw the cost to insure its debt against default surge to a record, amid speculation about how the bank might finance its long-awaited restructuring. The volatile swings spooked wealthy clients, with several rich families in the Middle East and Asia collectively pulling hundreds of millions of dollars, according to people familiar with the matter.
Inside the bank, relationship managers sought to persuade clients to stay as rival bankers sought to fan speculation about Credit Suisse’s financial health, the people said, asking not to be identified because the information is private. In the end, the lender stepped in with a $3 billion bond repurchase to calm the market and take advantage of the recent selloff in its debt.
The frantic maneuvering underscores the urgency for Chief Executive Officer Ulrich Koerner to finalize a restructuring that’s been in the making for more than two months. Koerner is exploring radical cuts to the loss-making investment bank, including spinning off large parts, to avoid that its troubles eventually damage the wealth business. Yet with a key question — how to pay for it — unanswered less than three weeks before he’s due to present his plan, that scenario is already looking all too real.
“We are in close contact with our clients as we are working on the strategic review,” said a spokesman for Credit Suisse, which managed almost $770 billion for wealthy clients at the end of June. Figures on outflows or inflows “are disclosed as usual on a quarterly basis.”
While external investment bankers are busy sketching out how a capital raise may be structured if it’s needed, Credit Suisse executives would strongly prefer not to issue equity with the share price near record lows, people briefed on the discussions said. But with a restructuring looming that several analysts estimate will cost at least $4 billion, the firm is exploring several options to generate fresh capital.
One answer would be to bring in outside investors to help with a spinout of the investment bank’s advisory and capital markets business under the First Boston name, Bloomberg reported this week. Credit Suisse has already said that it’s interested in selling at least part of another trading business, the securitized products group, and that it’s considering other asset sales. Pimco and an investor group including Centerbridge Partners are among a shortlist of bidders for the SPG unit, Bloomberg reported Friday.
Analysts have said an initial public offering for part of Credit Suisse’s lucrative Swiss business or an IPO or sale of its asset management unit were other options to raise cash, but those are seen as less attractive options.
While investors wait for details on Koerner’s plan, the wild swings in Credit Suisse’s stock and debt are rendering the firm an easy target for rivals trying to lure its wealthy clients. Shares of the lender were down as much as 12% at the start of the week and up as much as 15% at the end. They lost more than half this year and are trading near a record low.
Bankers at competing firms — some of them former Credit Suisse employees — pounced on this week’s market moves, forwarding negative news stories and information on the bank’s credit default swaps to wealth management clients, according to the people. There’s a long-running debate in the industry whether such tactics are fair game when a rival is in the spotlight.
In Singapore and the Middle East, some clients requested to withdraw cash or move assets worth in the tens of millions of dollars and in some cases more, the people said, asking to remain anonymous discussing private information.
Credit Suisse managed 763 billion francs ($768 billion) for wealthy clients globally as of June 30, down from 856 billion francs at the start of the year, as stock and bond markets slumped and the bank severed relationships with some wealthy Russians. Clients in Asia and the US added money in the first half.
An Asian family office client who requested cash pulled was told by the bank that there was a queue of transactions yet to be processed, resulting in some temporary backlogs, a person with knowledge of the situation said.
Private bankers are seeking conversations with clients to reassure them of the bank’s solid capital buffer and liquidity. They also started to propose solutions such as moving assets to third-party fiduciaries and investing cash into short-dated US treasury bills to limit any exposure, one of the people said.
Koerner tried to reassure staff in a memo that speculation about the lender’s health was unfounded. “I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank,” he wrote.
Credit Suisse had a CET1 capital ratio of 13.5% at June 30, far above the international regulatory minimum of 8% and the Swiss requirement of about 10%. Its liquidity coverage ratio is one of the highest among European and US banking peers. And even if it were to get into deeper trouble, the Swiss government has been working on a new law that would provide a public liquidity backstop for systemically-relevant banks.
Most Read from Bloomberg Businessweek
The Massive Gas Field That Europe Can’t Use
Even After $100 Billion, Self-Driving Cars Are Going Nowhere
Hackers Target Eager Homebuyers With a Dumb Scam That Keeps Working
‘I Am Energy’: Inside the Bang Billionaire’s Reeling Empire
©2022 Bloomberg L.P.
Related Quotes
Yahoo Finance Live anchors discuss Credit Suisse's debt buyback. 
News of Credit Suisse's plans to restructure and buy back $3 billion in bonds has sent shares of the stock up over 10% on Friday.
ZURICH (Reuters) -Credit Suisse will buy back up to 3 billion Swiss francs ($3 billion) of debt, an attempt by the Swiss bank to show its financial muscle and reassure investors concerned about the lender's overhaul and how much it may cost. One of the largest banks in Europe, Credit Suisse is trying to recover from a string of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to failed financier Greensill. Credit Suisse shares gained as much as 3% in early Friday trading, while the price of its euro-denominated bonds rose.
For many, the main point of investing in the stock market is to achieve spectacular returns. While the best companies…
Even though Deere & Company ( NYSE:DE ) stock gained 4.2% last week, insiders who sold US$3.9m worth of stock over the…
The Swiss National Bank (SNB) will not accept Swiss inflation above its target of 0-2%, Chairman Thomas Jordan said, adding that tolerating a steeper rate of price rises could mean even higher inflation in future. Jordan said the SNB's definition of its price stability goal was different to the European Central Bank's symmetric inflation target of 2%. "For us 3% is no longer price stability," Jordan told the event organised by Swiss business magazine Bilanz on Thursday.
Monte dei Paschi di Siena's (MPS) plan to proceed with a capital raise is entering a decisive stage with CEO Luigi Lovaglio and the banks due to guarantee the sale still hammering out final details, people close to the matter said. MPS aims to launch the new share issue for up to 2.5 billion euro ($2.5 billion) on Oct. 17. To meet its deadline MPS must approve the terms of the share issue at the very latest by the middle of next week, two people said.
Spotify terminated at least 38 employees across the Gimlet and Parcast studios as the company canceled 11 original shows, according to the unions representing employees of the divisions. In a joint statement Friday, the two unions said the layoffs represented about 30% of their members. “These aren’t small cuts, they are massive restructurings,” the Gimlet […]
The good news is that the labor market remains robust, slowing at a more moderate pace than experts had expected. That's also the bad news.
(Bloomberg) — Credit Suisse Group AG offered to buy back up to $3 billion of its own debt, in a move aimed at calming investor jitters ahead of the unveiling of a crucial strategy revamp. Most Read from BloombergBiden Says Putin Threats Real, Could Spark Nuclear ‘Armageddon’Kremlin Lets State Media Tell Some Truths About Putin’s Stalling WarMusk's Twitter Takeover Hits Snag Over Debt-Financing IssueBiden Should Hit Saudi Arabia Where It Really HurtsNord Stream Leaks Caused by Detonations in Sig
Toyota (TM) restarts production of its first mass-market EV, bZ4x, after it was recalled earlier in the year over a wheel safety issue. It has found a fix for the hitch, and shipments will soon begin.
The on-again-off-again deal between Elon Musk and Twitter is somewhere between on and off again. After being halted in midday trading, Twitter shares surged 22% Tuesday. Energy prices could shoot higher again following the biggest oil-production cut by OPEC+ since 2020.
Typically the catalyst for these failed bounces has been anticipation that an economic report or the Fed itself would hint at some sort of dovish change of course. The bulls keep hoping that there will be data that will give the Fed a reason to relent. The bulls have been quite optimistic about this, even though a dozen Fed members have made it very clear that they are not going to be swayed by one or two soft reports.
The collection, now valued at $840,000, is worth less than a percentage point of the $21 million that the troubled hedge fund spent in assembling it.
Credit Suisse will buy back up to 3 billion Swiss francs ($3 billion) of debt, an attempt by the Swiss bank to show its financial muscle and reassure investors concerned about the lender's overhaul and how much it may cost. One of the largest banks in Europe, Credit Suisse is trying to recover from a string of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year, when it also had to suspend client funds linked to failed financier Greensill. Credit Suisse shares gained as much as 3% in early Friday trading, while the price of its euro-denominated bonds rose.
(Reuters) -Levi Strauss & Co cut its full-year profit forecast after missing third-quarter revenue on Thursday, as softening demand and a strengthening U.S. dollar adds to worries alongside higher costs, sending shares down 6% in extended trading. Consumers are shifting their focus away from higher-priced products and clothes to essentials due to decades-high inflation, affecting Levi's and other apparel makers. The company is more cautious about its business in Europe as the consumer in the region is impacted by much higher inflation as well as steeper energy costs, Chief Executive Officer Charles Bergh said in an earnings call.
When determining how much you should invest, consider your income, debt, and emergency fund.
Quarterly Monitor: The average fund fell 4.5% in the third quarter, adding to the year-to-date decline, as the market absorbed inflation troubles and the Fed’s rate moves.
With home values on the rise, many homeowners are tempted to access their equity for low-cost borrowing. Instead of refinancing or selling your home, you can use a home equity line of credit (HELOC) to borrow money as you need … Continue reading → The post What Are the Closing Costs for a HELOC? appeared first on SmartAsset Blog.
Everyone knows that you should buy low and sell high if you want to turn a profit in the markets. The trick is finding the bottom, to know when to buy. Jim Cramer, the well-known host of CNBC’s ‘Mad Money’ program, sees the market bottom hitting in the next couple of weeks, making the end of October the right time for investors to buy in. Referring to some recent predictions by market technician Larry Williams, Cramer says, “The bear market is more or less… toast and, even if the current rally s

source

About Author