Credit Suisse looks to the Middle East to increase its capital | Business and Economy News
Credit Suisse Group AG has turned to Middle Eastern sovereign wealth funds for a capital raise, news agencies report.
The scandal-hit Swiss bank has approached at least one Middle Eastern sovereign wealth fund for a capital injection, Reuters reported on Monday, citing an unnamed source.
Abu Dhabi and Saudi Arabia are considering whether to invest money from their sovereign wealth funds in investment bank Credit Suisse and other businesses, Bloomberg News reported. Such an investment could benefit from their low valuations, according to the report.
Credit Suisse investment banking chief Christian Meissner will leave the bank once it announces a strategic overhaul on Oct. 27, a source familiar with the matter told Reuters.
The size and other details of a possible capital injection could not be known.
A Credit Suisse spokesperson declined to comment, saying the bank would update its strategy when third-quarter results are announced.
The Middle East’s largest sovereign wealth fund investor at Credit Suisse, the Qatar Investment Authority, declined to comment. Abu Dhabi’s Mubadala also declined to comment. The Abu Dhabi Investment Authority and Saudi Arabia’s Public Investment Fund did not immediately respond to requests for comment.
Credit Suisse shares were trading up more than 4.5% during midday trading in New York after the news was released.
Credit Suisse, one of Europe’s biggest banks, is trying to recover from a series of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year. last when it also had to suspend client funds linked to bankrupt financier Greensill.
Analysts said the company may need 9 billion Swiss francs ($9 billion) as part of a reorganization, some of which may have to come from investors and some from asset sales.
It has already begun a process to sell its US asset management arm, Bloomberg News reported Monday, citing people familiar with the matter. The unit is expected to attract interest from private equity firms, according to the report.
His approach to a capital raise indicates that the sale of assets alone may not be enough to cover the costs of an impending overhaul that the beleaguered bank hopes to draw a line under heavy losses and a series of scandals.
On Monday, the Swiss lender agreed to pay $495 million to settle a lawsuit over mortgage-related investments in the United States, adding to the billions it has paid to resolve legal cases related to its business. residential mortgage-backed securities (RMBS). on the eve of the 2008 global financial crisis.
The New Jersey deal was the largest of its remaining exposure to its legacy RMBS business, Credit Suisse said. Five remaining cases, all much smaller, are still in dispute.
In June, Credit Suisse was found guilty of failing to prevent money laundering by a gang of Bulgarian cocaine smugglers while a court in Bermuda ruled that a former Georgian prime minister and his family owed damages -interest of more than half a billion dollars to the local life insurance branch of Credit Suisse. .
Credit Suisse Chairman Axel Lehmann pledged on Friday to reform the bank after a “horrible” 2021 in which it lost billions of dollars, the biggest loss in its history.
“We are fully aware that we have to change, and we will change, clearly,” he said.
Lehmann took over the Swiss bank in January.
Earlier this month, its shares plunged as much as 11.5%, hitting a record low of $3.64.
At the same time, credit default swaps – a type of investment that serves as insurance against a company’s default – hit all-time highs, leading to rumors that the bank was on the brink of the collapse.