Credit Suisse pledges commitment to Greater China as it announces US$4 billion capital raise to fund sweeping overhaul

Credit Suisse Group has pledged its commitment to Hong Kong and mainland China as the Zurich-based bank announced its most dramatic step yet to repair its credibility, unveiling a fresh plan that will see a multibillion-dollar capital raise, a carve out of the investment bank and thousands of job cuts after it posted another huge loss.

“We remain very committed in Hong Kong and Greater China,” said Benjamin Cavalli, chief executive of Credit Suisse’s Hong Kong office. “It has been home to Credit Suisse for a long time. It’s a key pillar of the firm, not just regionally, but globally as well, and it is part of our growth strategy.”

Cavalli himself recently bucked the trend of talent flow, moving to Hong Kong after more than 20 years in Singapore.

“Today’s decisive actions to raise new equity and transform the bank to be stronger, simpler and client-focused will strengthen our Credit Suisse franchise in Hong Kong,, which remains a key wealth management hub and a vital gateway to our thriving Greater China businesses,” Cavalli said.

As part of the plan, Credit Suisse plans to raise 4 billion francs (US$4 billion) through a rights issue and selling shares to investors including the Saudi National Bank, it said on Thursday. It is effectively breaking up the investment bank, separating the advisory and capital markets business and selling a majority of its SPG business to Apollo Global Management and Pacific Investment Management.

The capital raise will capitalise the bank at pro forma common equity Tier 1 ratio, which measures a bank’s capital against its assets of 14 per cent (up from 12.6 per cent), enabling it to grow its Asia-Pacific businesses, Cavalli said.