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Credit Suisse Raises $4.3 Billion to Support Thiam's Plans

Zacks Equity Research

Shareholders of Credit Suisse Group AG CS agreed to buy about 99.2% shares offered in its second rights issue since Tidjane Thiam took over the bank in mid-2015.

Thiam had proposed this offer in a general meeting in May, with a view to fund the bank’s wealth management unit. The unit experiences stable revenue flow along with lower capital requirement in comparison to the trading operations.

The issue helped the bank raise about CHF 4.1 billion ($4.3 billion). Further, the bank seeks to sell the remaining shares at about CHF 10.80 per share in the market. These shares are likely to begin trading on Jun 8.    

Also, following the issue, Credit Suisse’s common equity Tier 1 capital ratio is likely to be 13.4% of risk-weighted assets.

Another bank that recently received shareholders’ approval for raising capital is Deutsche Bank AG DB. The bank was authorized to raise about $0.6 billion shares in the form of new shares against cash payments.

We remain encouraged by Thiam’s plans for restructuring the bank’s business model. Also, these initiatives are likely to free Credit Suisse from the capital dearth since the 2008 crisis.

Credit Suisse’s shares have gained 5.6% in the last one year, underperforming the Zacks categorized Banks - Foreign industry’s rally of 19.2%.

Some stocks worth considering in the same space include Bank of N.T. Butterfield & Son LTD NTB, KB Financial Group Inc. KB and UBS Group AG UBS.

Bank of N.T. Butterfield & Son and KB Financial Group sport a Zacks Rank #1 (Strong Buy) , whereas UBS Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.  

Bank of N.T. Butterfield & Son’s earnings estimates were revised upward by 5.9% for the current year, in the past 60 days. Also, its share price jumped 17.9%, over the last six months.

KB Financial’s current-year earnings estimates were revised 13.5% upward, over the last 30 days. Further, its shares increased 62.2%, in the last one year.

UBS Group witnessed a 5% upward earnings estimates revision for the current year, in the past 30 days. Moreover, its shares gained 9.0% in the last one year.

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