Credit Suisse stock extends losses amid report of potential capital raise (NYSE:CS)

Credit Suisse (NYSE:CS) ADSs have sunk 11% in Friday morning U.S. trading after Reuters reported on Thursday that the Swiss bank had approached investors about raising fresh capital.

Raising money by selling new shares would dilute the holdings of existing shareholders. As a result, when companies announce new stock offerings, their share prices usually decline.

People close to the bank told the Financial Times that seeking more capital from shareholders would be a last resort due to the stock’s depressed price. As of 8:56 AM ET, Credit Suisse ADSs were $4.29. In trading in Switzerland, its share were down 10% to CHF4.18 (US$4.27) at 2:43 PM CET.

Update at 10:40 AM ET: CNBC’s David Faber reported on Friday that the company is not pursuing a capital raise and will introduce its new strategic plan in October.

“We have said we will update progress on our comprehensive strategy review when we announce our third-quarter earnings; it would be premature to comment on any potential outcomes before then,” a Credit Suisse (CS) spokesperson said in an email to Seeking Alpha.

While Reuters reported Thursday that the company was considering pulling out of the U.S. market, Credit Suisse (CS) responded to Seeking Alpha that it “is not exiting the U.S. market. Any reporting that suggests otherwise is categorically false and completely unfounded.”

The FT reported Thursday that the company is considering splitting its investment bank into three units, including a so-called “bad bank” to wind down problem assets.

Leave a Comment