• Credit Suisse announced its intention to raise $4 billion in capital through the issuance of additional shares.
• The second-largest lender in Switzerland announced significant third-quarter losses.
• Saudi National Bank pledged to spend up to $1.5 billion in order to get a stake of up to 9.9 percent.

In its most recent effort to turn around the group’s fortunes, the Swiss bank Credit Suisse has revealed plans to raise billions in new capital, eliminate 9,000 positions, and overhaul its investment banking division.

The second-largest lender in Switzerland announced significant third-quarter losses on Thursday as it began a strategy review to end a string of scandals and build “a simpler, more focused, and more stable bank.”

Credit Suisse announced its intention to raise $4 billion in capital through the issuance of additional shares to suitable investors, including Saudi National Bank, which has pledged to spend up to $1.5 billion in order to get a stake of up to 9.9 percent. It would then rank as the second-largest stakeholder in the group.

Separately, the Swiss lender plans to strengthen its balance sheet by issuing rights to current shareholders.

The bank also announced that over the following three years, it will reduce its personnel from 52,000 at the end of September to roughly 43,000, “reflecting natural attrition and deliberate manpower reductions.”

Along with agreeing to sell a sizable portion of its securitized products business to Apollo Global Management and PIMCO, it also announced intentions to spin off its capital markets and consulting activities into a separate firm under the name CS First Boston.

The statement came as the bank reported a net loss for the third quarter of $4 billion or 4.034 billion Swiss francs. The significant loss was mostly caused by write-offs connected to the reorganization of the investment banking industry, including adjustments for lost tax benefits.

On the main SMI index of the Swiss stock exchange, shares began 7.26% lower at 4.417 Swiss francs ($4.47).

The 166-year-old bank, according to its chairman Axel Lehmann, has “gotten distracted” lately.

“A radical strategy and a clear execution plan to establish a stronger, more resilient and more efficient bank with a robust base, focused on our clients and their requirements,” he said of the reevaluation of the bank’s direction.

After a number of investments went bad, Lehmann stated that the bank will endeavor to enhance its risk management and control procedures.

He declared, “I am certain that this is the road map for success, aiding in the restoration of trust and pride in the new Credit Suisse.

The most recent overhaul is the third attempt in recent years by successive CEOs to turn the organization around, with the goal of overcoming the bank’s biggest crisis in its history.

The bank, which was once a representation of Swiss dependability, has had its reputation tarnished by a number of scandals, including an extraordinary domestic conviction involving money laundering for a criminal group.

Ulrich Koerner, the company’s new chief executive and a renowned expert in bank restructuring, called Thursday’s statements “an historic occasion for Credit Suisse.”

To help develop a new bank that is simpler, more reliable, and with a more focused business model structured around client demands, he stated, “We are substantially overhauling the investment bank.”

Koerner’s new business plan is “only the first step in a lengthy journey to reestablish credibility and reclaim the trust,” according to Andreas Venditti, an analyst at Swiss investment managers Vontobel.

He said that the third-quarter losses were “obviously greater than expected” and that “resolute execution” and “no more blunders” would be essential. He also noted that it would take time for results to start to become apparent.

Also Read

PM Shehbaz, Saudi Arabian crown prince agree to cement bilateral ties

Matters pertaining to bilateral cooperation and regional security situation between Saudi Arabia...