Credit Suisse (NYSE:CS) is considering a plan to split its investment bank into three units, including a "bad bank" that would hold risky assets and non-core assets that it would eventually dispose, the Financial Times reported Thursday, citing people familiar with the matter. The Swiss bank's new CEO Ulrich Körner is looking at its options as he seeks to shore up the company's reputation after three years of scandals and billions of dollars of losses.
As part of the proposal, Credit Suisse (CS) would well sell some profitable units, such as its securitized products business in order to gain the capital it needs to grow its core businesses. Disposing of the securitized products unit will reduce the company's capital commitments, but would also jettison one of its most profitable businesses, the FT said.
The newest proposal under consideration would split the investment bank into an advisory business, which it could spin off at some point, a bad bank to hold high-risk assets to be wound down; and the rest of the business.
Specifically, the plan could help the company avoid raising money in the public equity markets. Credit Suisse (CS) shares are trading in Switzerland at CHF4.87 (US$4.95), down 1.0%, in Thursday trading, near its lowest level in ~30 years. In U.S. premarket trading, its ADSs are down 0.8% at $4.96.
In July, Credit Suisse (CS) said it would provide details of its strategic review when it announces Q3 earnings, scheduled for Oct. 27. In August, Bloomberg reported that the bank is considering cutting thousands of jobs in push to reduce its costs.
Last week, Bloomberg reported that Credit Suisse (CS) is considering bringing back the First Boston name in its investment banking business.
In July, the company named Körner was named CEO and announced a comprehensive review of its operations.