 has announced plans to launch a £3 billion rights issue, as it abandons plans for a partial Initial Public Offering (IPO).){kind=link}
Credit Suisse (NYSE:CS) has announced plans to launch a £3 billion rights issue, as it abandons plans for a partial Initial Public Offering (IPO).
The Swiss bank said in a statement that they have “decided not to pursue a partial initial public offering of our Swiss banking subsidiary Credit Suisse (Schweiz) AG, thus retaining full ownership of a historically stable income stream in our home market of Switzerland and avoiding complexity in the business structure and activities of a key division of the group.”
Chief executive Tidjane Thiam announced the IPO plan back in October of 2015. However, the plan was met with some resistance from investors who were skeptical of its viability.
Thiam commented on the decision to abandon the public offering, in a statement he said: “This capital raise will allow us to continue to invest in growth at highly attractive returns; to strengthen balance sheet resilience for our clients and other stakeholders; and to afford the costs associated with our ongoing restructuring plans.”.
The announced subscription rights are expected to commence trading from 23 May until 2 June. Alongside the partial share issue, the Swiss bank also announced plans to shift to an all-cash dividend to ensure that the stake of investors will not be diluted.
As part of efforts to raise capital, Credit Suisse also have been in the midst of instigating 5,500 job cuts as it looks to strengthen its finances. Alongside cost-saving initiatives, the bank has witnessed some recovery from its record low back in July, having delivered a stronger profit performance for the first quarter in 2017.
The bank said that first-quarter net income jumped to 596 Swiss Francs (£467 million), compared to a net loss of 302 million Swiss Francs a year earlier. Revenues similarly rose 19 percent to 5.5 billion Swiss Francs.
Credit Suisse follows suit of various over European banks who have over the past year, looked to raise further capital. The embattled Deutsche Bank (ETR:DPW) and UniCredit (BIT:UCG) were able to raise €8 billion and €13 billion respectively.