Credit Suisse is looking for capital from the Middle East, the best banker will leave

ZURICH, Oct 17 (Reuters) – Credit Suisse Group AG (CSGN.S) has approached at least one Middle Eastern sovereign wealth fund for a capital injection, a source said, as some funds scrutinize the Swiss bank’s business affected by the scandal as potential investment opportunities.

Abu Dhabi and Saudi Arabia were considering, through their sovereign wealth funds, whether to pour money into investment bank Credit Suisse and other ventures, Bloomberg reported. One investment would be to take advantage of low valuations, he said.

Credit Suisse investment banking chief Christian Meissner will leave the bank once it announces a strategic overhaul on Oct. 27, a source familiar with the matter said.

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The size and other details of a possible capital injection could not be known.

A Credit Suisse spokesperson declined to comment, reiterating that it will update its strategy when the third quarter results are announced.

The Middle East’s largest sovereign wealth fund investor at Credit Suisse, the Qatar Investment Authority, declined to comment. Mubadala declined to comment. ADIA and PIF did not immediately respond to requests for comment.

Credit Suisse shares were trading up more than 4.5% by midday in New York.

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Credit Suisse, one of Europe’s biggest banks, is trying to recover from a series of scandals, including losing more than $5 billion from the collapse of investment firm Archegos last year. last, when it also had to suspend client funds linked to bankrupt financier Greensill.

Analysts have said the company may need 9 billion Swiss francs ($9 billion) as part of a reorganization, some of which may have to come from investors and some from asset sales.

It has already begun a process to sell its US asset management arm, Bloomberg News reported Monday, citing people familiar with the matter. The unit is expected to attract interest from private equity firms, according to the report. Read more

His approach to a capital raise indicates that the sale of assets alone may not be enough to cover the costs of an impending overhaul that the beleaguered bank hopes to draw a line under heavy losses and a series of scandals.

On Monday, the Swiss lender agreed to pay $495 million to settle a lawsuit over mortgage-related investments in the United States, adding to the billions it has paid to resolve legal cases related to its business. residential mortgage-backed securities (RMBS). on the eve of the 2008 financial crisis.

The New Jersey case was the largest of its remaining exposure to its legacy RMBS business, Credit Suisse said, with five remaining cases, all much smaller, still in litigation.

In June, Credit Suisse was found guilty of failing to prevent money laundering by a Bulgarian gang of cocaine smugglers, while a court in Bermuda ruled that a former Georgian prime minister and his family owed damages of more than half a billion dollars to the local life insurer of Credit Suisse. arms.

Credit Suisse Chairman Axel Lehmann pledged on Friday to reform the bank after a “horrible” 2021 in which it lost billions of dollars, the biggest loss in its history.

“We are fully aware that we have to change and we will change, clearly,” he said.

Lehmann took over the Swiss bank in January.

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Reporting by Paritosh Bansal in New York, Elisa Martinuzzi in London, John Revill, Oliver Hirt and Noele Illien in Zurich; additional reporting by Yousef Saba in Dubai; edited by John O’Donnell and David Evans

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