Credit Suisse Group AG is trying to bring in an outside investor to inject money into a spin-off of its advisory and investment banking businesses, as company executives aim to put the finishing touches on their overhaul planned.
Companies targeted for a boutique-style future include the advisory and trading teams alongside the leveraged finance unit, people with knowledge of the deliberations said. The bank is interested in an outside investor to take a partial stake to provide capital and help fund the costs of hiring and retaining talent, the sources said.
Talks on reviving the First Boston name for spin-off companies, which would derive most of their revenue from the United States, are also progressing, the people said, asking not to be named. The bank is also considering other options and deliberations are still ongoing.
Investment bank Credit Suisse is at the heart of Chief Executive Ulrich Koerner’s planned restructuring after racking up huge losses and playing a leading role in some of its biggest scandals. The bank tries to reduce the risks and costs associated with the business, while retaining at least some revenue and capacity to serve wealth management clients.
A split of the trading and underwriting unit would effectively split the struggling division into three pieces, with Credit Suisse retaining a shrunken trading unit while separating its securitized product pool and other assets it wants to offload. And attracting outside investors would help answer how it will finance a major restructuring, questions that have weighed on the stock as the company seeks to avoid a share sale with the price near record lows.
The allure of the spin-off unit would be a stake in a franchise with a long history of advising on major mergers and stock offerings. Michael Klein, a US trader who also sits on the board of Credit Suisse, has been heavily involved in reviving the First Boston brand, the sources said.
Still, the bank is reportedly looking to sell potential investors on a leveraged finance business that suffered losses amid turbulent markets and a trading unit that saw dozens of high performers leave.
“We have announced that we will update the progress of our comprehensive strategy review when we announce our third quarter results,” the bank said in a statement. “It would be premature to comment on potential results before that.”
Credit Suisse shares were up 2.2% at 1:32 p.m. in Zurich trading.
It is unclear whether the bank has had substantive discussions with potential investors and spin-out plans are not set in stone, the people said. In the past, the Swiss company has often turned to Middle Eastern investors, with the Qatar Investment Authority investing during the financial crisis and buying convertible bonds issued by the company last year.