Credit Suisse Unveils Sweeping Revamp to Revive Its Fortunes

Credit Suisse also plans to put some of its riskiest assets and nonessential businesses, including what’s left of its hedge fund lending unit and its operations in regions like Latin America, into a new division — informally known in financial circles as a “bad bank” — to eventually be sold or wound down.

The bank reached a preliminary deal to sell a majority of its securitized products group, a profitable but risky trading business that requires significant capital, to investors led by Apollo Global Management and PIMCO. If a final agreement is reached, the transaction is expected to close by next summer.

Credit Suisse said it would cut its costs by some $2.5 billion through measures including layoffs that will reduce its employee count by 9,000 positions. It employed about 52,000 people at the end of September.

And it plans to raise about $4 billion by selling new shares to investors to shore up its capital reserves, including more than $1 billion to the state-owned Saudi National Bank, which would own nearly 10 percent of Credit Suisse after the transaction.

Thursday’s earnings announcement underscored the urgency behind the vast restructuring. Credit Suisse said its loss reflected weak performance in its investment bank, as well as charges related to legal settlements in a New Jersey mortgage-bonds investigation and a French money-laundering case.

“This is not an acceptable outcome,” Dixit Joshi, Credit Suisse’s chief financial officer, told analysts.

Article source: https://www.nytimes.com/2022/10/27/business/credit-suisse-restructuring.html