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Credit Suisse seeks Middle Eastern capital, and a senior banker will travel there

Haiden Holmes

Oct 18, 2022 14:22

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According to a source, Credit Suisse Group AG has approached at least one Middle Eastern sovereign wealth fund for a capital injection, while other institutions are analyzing the scandal-plagued Swiss bank's operations as potential investment opportunities.


Bloomberg reported that Abu Dhabi and Saudi Arabia were investigating the possibility of investing their sovereign wealth funds in Credit Suisse's investment bank and other companies. It was indicated that an investment will be made to capitalize on reduced prices.


Christian Meissner, head of investment banking at Credit Suisse, will depart the bank on October 27, according to a source with knowledge of the issue.


Unknown were the size and other particulars of a potential capital investment.


A spokesperson for Credit Suisse declined to comment and stressed that the company will provide an update on its strategy review when it reports profits for the third quarter.


Qatar Investment Authority, the Middle Eastern state fund with the largest interest in Credit Suisse, declined to comment. Mubadala declined to react. ADIA and PIF did not immediately reply to requests for comment.


Monday's closing price for Credit Suisse's U.S.-traded depository receipts was up 3.6%. Insurance premiums on Credit Suisse debt.


Credit Suisse, one of the major banks in Europe, is seeking to recover from a series of scandals, including the loss of almost $5 billion from the collapse of investment firm Archegos last year, when it was also compelled to suspend customer funds associated with collapsed financier Greensill.


Analysts predict that the corporation may require up to 9 billion Swiss francs ($9 billion) for a reorganization, some of which may come from investors and the sale of assets.


According to a person with knowledge of the matter, it has already launched the sale of its U.S. asset management division, and opening bids are due by the end of this week. On Monday, Bloomberg News reported that private equity firms are believed to be interested in the project.


The bank's approach for raising capital shows that the sale of assets alone may not be sufficient to cover the costs of an upcoming reform that it hopes will put a stop to large losses and a string of scandals.


On Monday, the Swiss lender agreed to pay $495 million to settle legal action over mortgage-linked investments in the United States, in addition to the billions it had already paid to settle legal cases involving its residential mortgage-backed securities (RMBS) business prior to the 2008 financial crisis.


Credit Suisse noted that the New Jersey action was the largest remaining exposure on its legacy RMBS business, with five additional claims of a lesser magnitude still pending.


In June, Credit Suisse was found guilty of failing to prevent money laundering by a Bulgarian cocaine trafficking ring, while a Bermuda court found that a former Georgian prime minister and his family were entitled to more than $500 million in damages from Credit Suisse's local life insurance company.


Axel Lehmann, the chairman of Credit Suisse, vowed to restructure the bank on Friday, following a "bad" 2021 in which the company suffered its worst loss in its history.


"We are conscious that we must change, and we will," he said.


Lehmann seized management of the Swiss bank in January.

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