Credit Suisse Group AG said it would issue new shares after losses from Archegos Capital Management wiped out a strong first quarter, highlighting the damage caused by the collapse of the investment firm.
The bank said on Thursday it was posting notes converting into shares in six months to counteract damage to its capital position due to the loss and new levies imposed by the Swiss financial regulator. The offer is based on the bank’s share price in the coming days and could generate almost $ 2 billion in new capital.
It said it had only a small amount of exposure to Archegos as of Wednesday after selling 97% of its related positions, but lost another $ 655 million from the fund in the second quarter, amounting to $ 4 , 7 billion in the first quarter.
Switzerland’s financial regulator Finma said on Thursday it had opened enforcement proceedings against the bank over how it handled the risks surrounding Archegos.
Credit Suisse shares fell to 5% on the news of the capital increase. The share has fallen by about a third since the end of February, even though bank shares have generally performed well, thanks to the economies that recovered through the closure of Covid-19.