Credit Suisse in £3bn cash call after float U-turn

Credit Suisse launched a surprise £3 billion rights issue today as it abandoned plans to float its Swiss arm.

The bank, led by former Prudential boss Tidjane Thiam, is the third troubled euro-giant to raise cash in the markets to boost a weak balance sheet.

Deutsche Bank and Italy’s UniCredit have already raised €8 billion (£6.8 billion) and €13 billion respectively, cashing in on the bump from Trump that has caused bank share prices to rally since his election.

Credit Suisse’s decision to follow suit took investors by surprise. Though they have been concerned about the bank’s capital needs for some time, they had not expected such radical action. The Swfr4 billion (£3.1 billion) needed is at the top end of earlier guidance from the bank.

The decision to abandon a partial float of the Swiss banking arm could be as a result of investor pressure. Some said that since Credit Suisse Schweiz was more profitable than many other units, it made sense to hold it.

The bank said in a statement: “We have decided not to pursue a partial initial public offering of our Swiss banking subsidiary Credit Suisse (Schweiz) AG, thus retaining full ownership of a historically stable income stream.”

Bank analysts say the quarterly earnings figures out today were decent, boding well for rival Barclays, which reports its own numbers on Friday.

One analyst said of the move: “The capital raise is company-specific,” adding that it implied “absolutely nothing negative” for UK banks.

Thiam, who took the helm more than two years ago, said: “The decisions we have made will let us grow our tangible book value per share.”

He has been axing jobs to cut costs — 1500 went in the first quarter, with another 4000 to go before the year end. Credit Suisse employs 46,000 globally.

He added: “Our operating performance, combined with the strengthening of our capital base, leaves us well positioned to increase our profitability and generate value for our shareholders and our clients.” Credit Suisse went cap-in-hand to investors two years ago to raise Swfr 6 billion.

There will be an AGM on May 18 for investors to vote on this share issue, which will be offered at a 29% discount to the closing price yesterday.

Bill Winters’ rebuilding job at Asian-facing bank Standard Chartered picked up pace today as “particularly low” loan losses helped the bank almost double pre-tax profits to $1 billion (£780 million).

Winters joined the bank — which has fallen foul of regulators over sanctions-busting and been blighted by losses recently — in 2015. Shares jumped 31p, or 4%, to 759.1p.