Credit Suisse seeks to reassure investors with $3 billion debt buyback

ZURICH, Oct 7 (Reuters) – Credit Suisse (CSGN.S) will buy up to 3 billion Swiss francs ($3 billion) of debt, the troubled Swiss bank said on Friday, showing strength as seeks to reassure investors after a tumultuous week.

The move eases the Swiss bank’s debt burden and is an attempt to bolster confidence after its stock and bond prices fell sharply. Unsubstantiated rumors that his future was uncertain circulated on social media, amid fears he needed to raise billions of francs in fresh capital.

One of Europe’s largest banks, Credit Suisse had to raise capital, suspend share buybacks, cut its dividend and reorganize its management after losing more than $5 billion following the collapse of the investment firm Archegos in March 2021, when it also had to suspend the client of funds linked to failing financier Greensill.

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The bank said the debt buyback “would allow us to take advantage of market conditions to buy back debt at attractive prices.” Its shares were listed up 1.5% in pre-market activity on the Swiss stock exchange, indicating some relief for investors.

“It’s an opportunistic move to take advantage of market conditions that might reassure some investors,” said Vontobel analyst Andreas Venditti. “If bought below par, it results in a gain that will slightly increase the capital.”

The bank’s executives spent the weekend reassuring major clients, counterparties and investors about its liquidity and capital. Chief executive Ulrich Koerner also told staff in a memo that he had enough capital and liquidity. Read more

Earlier this week, in an unusual move, the Swiss National Bank, which monitors the financial stability of systemically important banks in Switzerland, said it was monitoring the situation at Credit Suisse.

Banks and banking groups are considered systemically important if their failure would cause significant harm to the Swiss economy and financial system.

Credit Suisse has announced that it is making a €1 billion cash tender offer for eight senior debt securities denominated in euros or sterling and another tender offer for 12 senior debt securities denominated in sterling. US dollars to a maximum of $2 billion.

The bank is due to present its new business strategy on October 27, when the third quarter results are announced.

Ratings agency Moody’s Investors Service expects Credit Suisse’s losses to hit $3 billion by the end of the year, potentially taking its capital base below the key 13% level, it said. Moody’s senior analyst on the bank told Reuters on Thursday. Read more

The bank has been working on possible asset and business sales in an effort to return to profitability.

He also said he was considering selling his famous Savoy hotel in the heart of Switzerland’s financial district, a deal which local media said could fetch around 400 million francs. Read more

($1 = 0.9897 Swiss francs)

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Written by John Revill and John O’Donnell; Editing by Edwina Gibbs and Mark Potter

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Robert D. Coleman