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Credit Suisse announces big loss

Announcing a loss far above expectations, Credit Suisse is preparing for a capital increase.

Credit Suisse, which has been grappling with various scandals for years, announced that it will sell 4 billion Swiss francs ($ 4 billion) worth of shares, lay off thousands of employees and separate its investment banking division to cover its losses.

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After its financial balance sheet showing a loss of four billion Swiss francs in the third quarter and the difficulties it has experienced in recent weeks, the bank announced the plan, which Chairman Acel Lehmann described as a “success map”.

Shares, which have fallen to record lows in the past weeks, fell 7.3 percent in the morning session as the new plan failed to satisfy investors.

According to the bank’s statement, the rapid withdrawal of customers’ funds from the bank in recent weeks has caused the company to fail to meet certain regulatory requirements regarding liquidity.

The company’s recovery plan includes laying off thousands of employees and offering more banking services to wealthy customers.

 

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By the end of this year, the bank will lay off 2,700 people, or 5 percent of its total workforce, and cut about 9,000 more by the end of 2025, bringing the total headcount to around 43,000.

Credit Suisse also plans to separate its investment banking division as CS First Boston. The subsidiary, which will focus on advisory and capital markets, is planned to attract financing opportunities and form a partnership with the new Credit Suisse.

Saudi National Bank, the largest bank in Saudi Arabia, announced that it will increase its shareholding up to 9.9 percent by acquiring 1.5 billion Swiss francs worth of Credit Suisse shares and invest in the newly established investment banking subsidiary.

Credit Suisse also announced that it will set up a capital relief unit to divest its non-strategic, high-risk units and will sell most of its securitized product unit.

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