- Bank will also switch to all-cash dividend from part scrip
- IPO was too complex, unit too important to income, bank says
Credit Suisse Group AG will raise 4 billion francs ($4.03 billion) in a rights offer and abandoned plans to sell part of its Swiss business as Chief Executive Officer Tidjane Thiam moved to end concerns about the bank’s capital levels.
The announcement ended weeks of speculation on how the Zurich-based bank would raise funds and came as the bank posted a profit of 596 million francs, powered by trading gains. That compares to a loss of 302 million francs a year earlier and the 336 million-franc average of seven analyst estimates compiled by Bloomberg. The bank also plans to move to an all-cash dividend.
Credit Suisse is the third major European bank to sell shares this year after Deutsche Bank AG and UniCredit SpA raised a combined 21 billion euros. The bank’s stock has rebounded from a record low in July, making a sale more attractive, while analysts and investors had questioned the merit of an IPO of its Swiss unit, which has generated its largest profit.
“A straight capital increase is less dilutive than the IPO,” Thiam said in an interview with Bloomberg Television on Wednesday. “Under normal circumstances, that should be it,” he said, referring to the bank’s capital measures.
Credit Suisse rose 1.8 percent to 15.58 Swiss francs at 9:09 a.m. in Zurich trading. The stock has gained 13 percent in the past six months as European banks rallied on the prospect that economic growth and rising interest rates could help revive earnings.
Bloomberg reported last month that the bank was considering the sale of stock valued at more than 3 billion francs as an alternative to its longstanding plan to raise capital by listing part of its Swiss unit.
Wealth Profits
Pretax profit at the international wealth management unit, which doesn’t include Switzerland or the Asia-Pacific region, fell 3 percent to 291 million francs due…