One of the biggest shareholders of Credit Suisse seems opposed to the partial sale of the Swiss business unit. His suggestion to reevaluate the plan is a pretty clear indication that the board has some convincing to do if it still wants to go ahead with the partial IPO.
Credit Suisse needs to reconsider the initial public offering (IPO) of the Swiss unit, said David Herro in an interview with «Finanz und Wirtschaft», a Swiss business paper. Herro is the investment boss at Harris Associates, the U.S. firm which holds a stake of a little more than 10 percent in Credit Suisse (CS). With this stake, Harris is one of CS’ biggest shareholder.
Herro suggested that selling a part of the unit meant giving up some of the control over an attractive business in exchange for fresh capital, asking whether it really made sense to sell a stake for a comparatively low price at a time when the worst in terms of its equity base seemed to have been solved at Switzerland's second-biggest bank.
A Clever Idea – at the Time
The arguments speaking in favor of an IPO had lost some of their allure since the plan was mooted in the autumn of 2015, Herro said. It had been a clever idea at the time, he conceded, but now the situation had evidently changed. «I hope the board will consider these facts and I’m sure it will take the right decision.»
The investor boss couldn’t be much clearer in expressing his opinion about the IPO and CS boss Tidjane Thiam earlier this month already started paving the way for a cancellation of the plan.
Time to Harvest
Shareholders of course prefer an increase of the CS stock price to the strengthening of the bank’s equity base. Herro rejects a capital increase as long as the stock is traded below book value.
Harris Associates predicts a recovery of the bank’s fortunes: CS is making great strides in all aspects and we soon will see results that aren’t distorted by one-off payments and charges, Herro promised.
