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Credit Suisse Mulls Share Sale Instead of Swiss Unit IPO
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Credit Suisse Group AG might raise capital through share sale instead of an initial public offering (IPO) of its Swiss unit. The likely reasons for considering such a move are lower costs and a faster pace of raising capital. The company will arrive at a decision next month, according to a Reuters report.
A couple of years back, the company had announced its plans to dilute 20-30% of its highly profitable Swiss business by 2017 through an IPO to raise CHF 2-4 billion. At that time, the company had a capital deficit of CHF 9-11 billion.
The company is keen to boost its capital position as a net loss of $2.7 billion incurred last year and a penalty of $5.3 billion to settle an issue, involving the illegal sale of mortgage-backed securities during the 2008 sub-prime crisis, dealt a blow to its financial strength.
Per sources, the company, through the possible share sale, could raise up to 10% of its market value or CHF 3 billion. This process can be easily done without drawing up any listing prospectus, as stated under the Swiss securities law.
We note in this regard that Deutsche Bank AG (DB - Free Report) will also raise capital through a share issue worth €8 billion to strengthen its capital position.
Shares of Credit Suisse gained 13.4% over the last six months, underperforming the 15.6% growth for the Zacks categorized Banks - Foreign industry.
Bank of Montreal witnessed an upward earnings estimate revision of 4.6% for the current year over the past 60 days. Moreover, its share price increased 24.81% in the past one year.
Grupo Financiero Galicia S.A. also recorded an upward earnings estimates revision of 7.4% for 2017 over the same time frame. Its shares increased 35.12% in the last one year.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>
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Credit Suisse Mulls Share Sale Instead of Swiss Unit IPO
Credit Suisse Group AG might raise capital through share sale instead of an initial public offering (IPO) of its Swiss unit. The likely reasons for considering such a move are lower costs and a faster pace of raising capital. The company will arrive at a decision next month, according to a Reuters report.
A couple of years back, the company had announced its plans to dilute 20-30% of its highly profitable Swiss business by 2017 through an IPO to raise CHF 2-4 billion. At that time, the company had a capital deficit of CHF 9-11 billion.
The company is keen to boost its capital position as a net loss of $2.7 billion incurred last year and a penalty of $5.3 billion to settle an issue, involving the illegal sale of mortgage-backed securities during the 2008 sub-prime crisis, dealt a blow to its financial strength.
Per sources, the company, through the possible share sale, could raise up to 10% of its market value or CHF 3 billion. This process can be easily done without drawing up any listing prospectus, as stated under the Swiss securities law.
We note in this regard that Deutsche Bank AG (DB - Free Report) will also raise capital through a share issue worth €8 billion to strengthen its capital position.
Shares of Credit Suisse gained 13.4% over the last six months, underperforming the 15.6% growth for the Zacks categorized Banks - Foreign industry.
The stock carries a Zacks Rank #2 (Buy).
Other Stock to Consider
A couple of better-ranked stocks from the same industry are Bank of Montreal (BMO - Free Report) and Grupo Financiero Galicia S.A. (GGAL - Free Report) . Both these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bank of Montreal witnessed an upward earnings estimate revision of 4.6% for the current year over the past 60 days. Moreover, its share price increased 24.81% in the past one year.
Grupo Financiero Galicia S.A. also recorded an upward earnings estimates revision of 7.4% for 2017 over the same time frame. Its shares increased 35.12% in the last one year.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? Last year's market-beating Top 10 portfolio produced 5 double-digit winners. For example, oil and natural gas giant Pioneer Natural Resources and First Republic Bank racked up stellar gains of +44.9% and +44.3% respectively. Now a brand-new list for 2017 has been hand-picked from 4,400 companies covered by the Zacks Rank. See the 2017 Top 10 right now>>