Struggling Credit Suisse Reveals Significant Business Overhaul, Planned Investment From Saudi, Shares Crash

Credit Suisse Group AG CS posted revenue of CHF3.804 billion, down from CHF5.437 billion a year ago.

The beleaguered bank posted a third-quarter net loss of CHF 4.034 billion, a massive turnaround from a profit of CHF 434 million a year ago.

The bank noted that the loss reflected a CHF3.655 billion impairment relating to the “reassessment of deferred tax assets as a result of the comprehensive strategic review.”

It also aims to cut its cost base by 15%, or CHF2.5 billion, by 2025.

The transformation plan will see Credit Suisse split off its investment bank into an independent capital market & advisory bank called CS First Boston.

The bank expects to incur restructuring charges of CHF2.9 billion from 4Q22 to 2024.

CS plans to offer approximately CHF 2.15 billion via rights offering and CHF1.85 billion via a new share issue.

Saudi National Bank has committed to invest up to CHF1.5 billion in Credit Suisse across both capital increases to achieve a shareholding of up to 9.9%.

The aim is to reduce risk-weighted assets, and leverage exposure by 40% each over the course of the restructure, while the bank also set out to allocate “almost 80% of capital to Wealth Management, Swiss Bank, Asset Management and Markets by 2025.”

Credit Suisse also entered a framework and exclusivity agreement to transfer a significant portion of its Securitized Products Group and other related financing businesses to an investor group led by Apollo Global Management.

Price Action: CS shares are down 12.1% at $4.21 during the premarket session on the last check Thursday.