Credit Suisse reveals up to $9 bln capital boost

AFP Photo/Fabrice Coffrini
Credit Suisse, Switzerland’s second biggest bank, has unveiled plans to boost its capital base by $15.3 billion, in response to sharp criticism from the Swiss central bank.

­The Swiss National Bank (SNB) report calls for urgent action to improve Credit Suisse’s capital this year. The criticism dropped shares of Credit Suisse to a 20-year low and undermined investors’ confidence.

The bank said it would issue $3.87 million worth of convertible bonds, sell assets and real estate and cut costs to add $8.9 billion to its capital. Credit Suisse also plans to cut costs by an extra $1 billion after the bank reached a 2013 target of decreasing spending by $2 billion. Credit Suisse has already lain off 1,500 employees by the end of June.

The announced plans have already pushed Credit Suisse shares up by more than 4%.

“The measures we have announced today should eliminate any of the doubt raised by the Swiss National Bank report,” Credit Suisse Chief Executive Brady Dougan said.

Meanwhile the SNB welcomed the move. “In an environment that remains particularly challenging for the international banking system, these measures substantially increase the resilience of Credit Suisse Group,” the central bank said in a statement.