Credit Suisse secures $6 bn from Qatar, Saudi

14th February 2011, Comments 0 comments

Swiss banking giant Credit Suisse said Monday that it was raising $6.0 billion by issuing bonds to Qatar Holding and Saudi Arabia's Olayan Group to help it meet tough new capital adequacy rules.

The convertible contingency or 'CoCo' bonds are to be converted into cash no earlier than October 2013, or exchanged for Tier 1 capital notes issued in 2008, the bank said.

Qatar Holding will take bonds worth $3.5 billion and Olayan Group $2.5 billion.

Once the bonds are converted, the bank "will satisfy an estimated 50 percent of our high trigger contingent capital requirement" set by Swiss regulators.

"The completion of a transaction of this size supports our conviction that contingent capital can be a material source of capital for the banking industry," said Brady Dougan, chief executive officer of the bank.

"We see this transaction as a significant development for Credit Suisse Group and our industry as we believe that it will put to rest concerns about the attractiveness of these instruments to investors," he added.

Since the global financial crisis, regulators have been drawing up tougher capital regulations for banks in order to avoid systemic bank failures.

CoCo bonds have been floated by the banking industry as possible instruments to help them raise capital to meet the new capital requirements.

© 2011 AFP

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