Credit Suisse’s leading shareholder Harris Associates will take up its rights in the bank’s SFr4bn capital raise, chief investment officer David Herro told the Financial Times.
“I would rather that they not had to raise any capital, but if they were to raise capital this makes the most sense, especially since they fell that growth is being constrained,” Mr Herro said. “We’ll subscribe to the rights issue”.
Credit Suisse announced earlier on Wednesday that it was abandoning the partial sale of its Swiss business and would instead offer new shares to investors at a 29 per cent discount to last night’s closing price.
Mr Herro, whose fund owns 9 per cent of Credit Suisse, said that the bank’s announcement that it will wind down its bad bank a year earlier than planned was a “very, very large positive”.
“Light is definitely at the end of the tunnel,” he said. “It means we could capture profits going forward, before the winding down of the SRU (strategic resolution unit) with one hand you would make it (profits), the SRU, would take some of it away”.
The fund manager also said he did not agree with shareholder pressure that forced chief executive Tidjane Thiam to volunteer for a 40 per cent cut to his bonus earlier this month. The shareholders argued that the bank’s SFr5.3bn settlement for misselling mortgage bonds was not adequately reflected in the SFr78m of bonuses awarded to Mr Thiam and his 11 most senior executives.
“I think the pay issue has been blown out of all proportion,” he said. “In the case of Tidjane in particular, who was nowhere near the company when some of these things happened, I don’t think his bonus should have been reduced…
“I believe he unfairly got caught in the crossfire. I would be against any sort of adjustment to his pay next year. If he does a good job he should get a proper bonus.”