CREDIT Suisse bowed to market and central bank pressure yesterday, announcing major new measures to bolster its capital position.
The plan was revealed as the bank published relatively positive earnings figures, showing profits rising in the second quarter as it cut costs.
It plans to raise SFr15.3bn (£10bn) by the end of this year, beginning with SFr8.7bn this month.
The Swiss National Bank last month raised concerns it had insufficient capital, and chief executive Brady Dougan believes this round of capital raising “should eliminate any doubt” about the bank’s stability.
Of the SFr15.3bn total, contingent convertible bond issuance will account for around SFr3.8bn while an accelerated exchange of hybrid notes will also contribute.
The remaining SFr6.6bn will be raised in the coming months.
That should take its look-through Swiss core capital ratio from seven per cent to 9.4 per cent – close to the 10 per cent required by 2018.
Markets agreed, with Credit Suisse’s shares jumping 6.7 per cent yesterday morning, before closing up 4.49 per cent at the end of the day.
Meanwhile the bank reported profits of SFr788m, up 2.6 per cent on the same quarter last year.
Although revenues fell in areas including equities sales thanks to lower client activity, the bank gained SFr66m on its partial sale of a stake in Aberdeen asset management.
The bank also cut SFr2bn in the first half of 2012, in part by reducing pay. For example pay in investment banking fell 30 per cent on the quarter as performance-related pay was slashed.