Credit Suisse is buying back debt and selling a hotel
(CS) said it will buy back up to $3 billion in its own bonds to save money on debt servicing costs while taking advantage of low prices.
The announcement on Friday comes after investors displayed concerns about the financial position of the troubled Swiss bank before it announces its restructuring plan later this month.
Shares plunged to a record low earlier this week but have since recovered. They rallied sharply on Friday, jumping 6% in morning trading in Zurich. They’re still down almost 50% year-to-date.
The bond announcement sends a message to investors that Credit Suisse is not overly worried about conserving cash.
Analysts have rushed to dig through the bank’s books after social media rumors stoked questions about whether it has sufficient capital to withstand deep losses or to deal with a sudden shock.
The lender is preparing to shrink its investment bank and beef up its wealth management arm — an expensive endeavor that could cost 6 billion Swiss francs ($6 billion), according to a recent analysis from Keefe, Bruyette & Woods. Asset sales would likely cover just 2 billion Swiss francs.
The bank just announced it’s looking to sell the famous Savoy Hotel in Zurich.
“Credit Suisse reviews its property portfolio on a regular basis as part of its global real-estate strategy,” the bank said in a statement. “As part of this process, the bank has decided to start a sales process for the Hotel Savoy. We will carefully assess all offers and potential investors and communicate any decision in due course.”
While years of scandals and fines have hurt the bank’s business, experts say Switzerland’s second biggest bank is not about to fail — though market turmoil could make it harder to raise the money it needs to finance its turnaround ambitions.
“From our perspective, looking at company financials at the end of [the second quarter], we see [Credit Suisse’s] capital and liquidity position as healthy,” JPMorgan Chase analyst Kian Abouhossein wrote in a note to clients.