Credit Suisse counters critics with $15.6 billion capital plan

Wed Jul 18, 2012 3:07pm EDT
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By Katharina Bart

ZURICH (Reuters) - Credit Suisse unveiled measures to boost its capital base by 15.3 billion Swiss francs ($15.6 billion), a move that was welcomed by a previously critical central bank and left some investors skeptical.

Credit Suisse said on Wednesday that steps including issuing convertible bonds and bringing forward an exchange of hybrid capital notes would boost capital by 8.7 billion francs immediately.

Other actions, such as divestments, paying bonuses in shares and earnings-related impacts, should add another 6.6 billion by year end.

"The measures we have announced today should eliminate any of the doubt raised by the Swiss National Bank report," chief executive Brady Dougan told a conference call.

Dougan, credited for steering the bank through the financial crisis without the need for a bailout, came under heavy fire after the bank's shares tumbled last month when the SNB called for urgent action to improve its capital this year and Moody's downgraded its long-term debt rating.

The SNB welcomed Credit Suisse's move. "In an environment that remains particularly challenging for the international banking system, these measures substantially increase the resilience of Credit Suisse Group," the central bank said.

Credit Suisse shares were up 3.6 percent to 17.76 francs by 0725 EDT, the biggest rise by a European blue-chip stock, but were still well below the 19 francs where they were trading before the SNB's report on June 14.

"We are unimpressed by these measures which cause unnecessary dilution to shareholders," said Kepler analyst Dirk Becker, who rates the stock at reduce.   Continued...

A logo is seen in front of a Credit Suisse building in Zurich, May 4, 2012. REUTERS/Christian Hartmann