Credit Suisse overhaul hailed by Swiss National Bank

ZURICH (Reuters) – The Swiss National Bank approves of steps taken by Credit Suisse to transform the struggling Swiss bank and bolster its capital, SNB Vice Chairman Martin Schlegel said.

“The SNB welcomes the recently announced steps for the strategic transformation of Credit Suisse,” Schlegel told Swiss newspaper Finanz und Wirtschaft in an interview published online Friday.

“The new direction of the business model will lead to reduced risk. At the same time, Credit Suisse is strengthening its capital base,” added Schlegel, who oversees financial stability at the central bank.

Credit Suisse on Thursday unveiled plans to raise 4 billion Swiss francs ($4.01 billion) from investors, cut thousands of jobs and focus more on investment banking toward wealthy clients .

The SNB has been closely monitoring the situation of Credit Suisse, which it has designated as one of Switzerland’s two global systemic banks along with its intercity rival UBS.

UBS economists, meanwhile, expect the SNB to post a loss of around 50 billion Swiss francs in the third quarter when it reports results on Monday.

Such a loss would halve the SNB’s capital, which stood at 103 billion francs at the half-year stage, but it would have no effect on the bank’s policy, Schlegel said.

“Directly, this would have no impact on the SNB. We can continue our tasks and fulfill our mandate even with negative equity,” he said.

“Nevertheless, it is important that we have enough capital. This helps the credibility of a central bank if it is well capitalized.”

($1 = 0.9964 Swiss francs)

(Reporting by John Revill; Editing by Michael Shields)