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Several surprises came with Credit Suisse’s first-quarter results on Thursday.
First, the bank has raised SFr1.7 billion of capital through two roughly equal tranches of six-month mandatory convertible notes, the second of which was offered to existing shareholders.
A first tranche had already been placed with a select group of core shareholders, institutional investors and ultra-high-net-worth individuals. These underwrote the second tranche, so ensuring full proceeds, even if existing shareholders don’t take up their subscription rights.
With common equity tier-1 (CET1) down to 12.2% at the end of the first quarter, this deal adds 55 to 60 basis points of new capital. And with a capital gain of 25bp also to come from the IPO of Allfunds, this should take Credit Suisse up to a 13% CET1 ratio – and a 4% CET1 leverage ratio – at which level it intends to operate for the rest of this year.
The decision to issue mandatory convertible notes was taken by ourselves
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On the same day that the Swiss bank announced results, Credit Suisse’s home market regulator, Finma, announced enforcement proceedings against it over Archegos, having already announc,ed proceedings over Greensill.
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