Credit Suisse is preparing to sell some of its stake in its domestic Swiss bank in an attempt to close a capital shortfall of about 4.5 billion francs, according to people familiar with the discussions.
Executives are in the final stages of planning a massive round of layoffs that could affect as many as 6,000 of the group’s 50,000 global workforce, with less than two weeks to go before the bank presents a radical strategic overhaul.
Ulrich Körner, who was named chief executive of Credit Suisse this summer, has been tasked with divesting the troubled Swiss lender’s accident-prone investment bank, and in recent years After a series of scandals to save CHF 1.5 billion in costs, the group’s share has shown record low prices.
While much of the attention so far has been on the Swiss bank’s investment bank’s disposal — with executives confident of selling all or part of its profitable securitization business — the board has also turned its attention to the The core part of the fundraising business is called Swiss Global Bank.
While the main domestic business providing a range of corporate, private and retail banking services in Switzerland will remain unchanged, the company is in talks to sell stakes in several subsidiaries and other businesses.
Some of those considered for sale include: a stake in SIX Group, which operates the Zurich Stock Exchange; an 8.6% stake in Spanish listed investment firm Allfunds; two specialist Swiss banks, Pfandbriefbank and Bank-Now; and Swisscard, a joint venture with American Express .
Credit Suisse has held a stake in Allfunds since 2019, and the business went public last year with a market value of 7.2 billion euros. Its shares have since halved, meaning the 8.6% stake in Credit Suisse is worth about 374 million Swiss francs.
The bank is also trying to sell the two-century-old Savoy, Zurich’s oldest grand hotel, which is the bank’s headquarters on Paradeplatz.
The luxury hotel, which is being refurbished, will reopen in 2024 and could be worth 500 million Swiss francs, according to bank insiders.
The board has ruled out disposals of Credit Suisse Asset Management and Private Banking, though it will continue to exit small, unprofitable markets, according to people familiar with the matter. Credit Suisse has already withdrawn its wealth management business in Mexico and sub-Saharan Africa this year.
Analysts have been debating the size of the capital shortfall caused by the changes banks are pushing, with Goldman Sachs putting the figure at 8 billion Swiss francs this week.
But after taking into account restructuring and legal costs, the bank’s board is confident it will be around 4 billion to 4.5 billion Swiss francs, according to people familiar with the matter.
The bank’s board and executive team have been evaluating each part of the business based on three main criteria: profitability, capital needs and importance to the wealth management business.
The New York-based securitization business was assessed as having too much capital needs and less overlap with the wealth business, which will be a core focus following the bank’s strategic review. The unit’s profitability makes it easier to sell.
People involved in discussions of the unit said they were confident of agreeing to a sale by Oct. 27 and were considering offers from several bidders, ranging from buying the entire unit to parts.
They confirmed interest from U.S. investors Apollo Global Management, Pimco, Sixth Street Partners and Centerbridge Partners, as well as Japanese bank Mizuho Financial Group, previously reported by Bloomberg and The Wall Street Journal.
JPMorgan analyst Kian Abouhossein last week raised his recommendation on Credit Suisse to neutral from underweight, saying he expects the securitization business to be sold.
He forecasts that the unit will generate 1.2 billion francs in revenue in 2024, meaning its 400 million francs pre-tax profit will account for the largest share of the investment bank’s 700 million francs total profit.
Credit Suisse declined to comment, saying it would provide a full update on the strategic plan on Oct. 27.
Additional reporting by Laura Noonan