Credit Suisse is closing another chapter of the past financial crisis. Shareholders had eagerly awaited the step by the Swiss bank.
Credit Suisse will redeem an aggregate of 5.9 billion Swiss francs ($6 billion) of high-trigger tier 1 capital instruments, the company said in a statement on Tuesday. The redemption takes place on October 23, 2018, the first optional redemption date.
The bank’s investors had been waiting for the redemption. Credit Suisse confirmed to finews.com that part of the redemption are two so-called Coco investments that the Qatar Investment Authority (QIA) had granted the bank during the financial crisis.
«This is a key step forward in reducing Credit Suisse’s funding costs, as we continue to reshape our balance sheet and optimize our capital structure», a spokesman said. The instruments carry a whopping interest of 9 percent and 9.5 percent per annum, an extreme rate compared with the average rates paid today.
The bank thus will get rid of the expensive instrument in the autumn that will have cost about 380 million francs each year. The redemption doesn’t of course lead to an end of the investment of QIA, which recently increased its stake in Switzerland’s second-largest bank.
