Credit Suisse Seeks To Reassure Investors With $3 Billion Debt Buyback

Credit Suisse will buy back up to 3 billion Swiss francs ($3 billion) of debt, the embattled Swiss bank said on Friday, making a show of strength as it seeks to reassure investors after a tumultuous week.

The move trims the Swiss bank's debt burden and is an attempt to bolster confidence after steep falls in its stock price and bonds. Unsubstantiated rumours that its future was in doubt have swirled on social media amid concern it may need to raise billions of francs in fresh capital.

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

The bank said the debt buyback would "allow us to take advantage of market conditions to repurchase debt at attractive prices". Its shares were indicated 1.5% higher in premarket activity on the Swiss exchange, indicating some investor relief.

"It's an opportunistic move to take advantage of market conditions that might be reassuring to some investors," said Vontobel analyst Andreas Venditti. "If bought below par, a gain results that will increase capital slightly."

Bank executives spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital. Chief Executive Ulrich Koerner has also told staff in a memo that it has sufficient capital and liquidity.

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

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

Credit Suisse said it was making a 1 billion euro cash tender offer in relation to eight euro or pound sterling denominated senior debt securities and another offer to buy back 12 U.S. dollar denominated senior debt securities for up to $2 billion.

The bank is due to present its new business strategy on Oct. 27, when it announces third-quarter results.

Rating agency Moody's Investors Service expects losses for Credit Suisse to swell to $3 billion by year-end, potentially bringing its core capital below the key 13% level, Moody's lead analyst on the bank told Reuters on Thursday.

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

It has also said it is looking to sell its famed Savoy Hotel in the heart of Switzerland's financial district, a deal local media said could raise around 400 million francs.

($1 = 0.9897 Swiss francs)

(Writing by John Revill and John O'Donnell; Editing by Edwina Gibbs and Mark Potter)