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The rights offering, which is part of a broader capital raise worth 4 billion francs, is intended to help fund the bank’s turnaround plan, an attempt to recover from the biggest crisis in its 166-year history.
By 1036 GMT, Credit Suisse shares fell 2.6% to 2.93 francs as the rights tumbled as much as 27% to as low as 0.105 on their second day of trading on the Swiss exchange.
The offering, which is guaranteed by a group of banks, will raise as much as 2.24 billion Swiss francs ($2.3 billion) and follows a 1.76 billion-franc share placement where Saudi National Bank took a 9.9% shareholding in Credit Suisse.
Shareholders in Switzerland’s second-biggest bank have the right to purchase two new shares at 2.52 francs each for every 7 rights they hold by December 8.
Investors fear the cash call might not be enough to stabilise the bank, which said last week it could book a pre-tax loss of up to 1.5 billion francs in the fourth quarter, and revealed that wealthy clients had made hefty withdrawals.
That had led to a big drop in liquidity, breaching some regulatory limits.
Credit Suisse’s five-year default swaps, a form of insurance for bondholders, blew out to a new record high of 403 basis points on Tuesday, according to data from S&P Market Intelligence.
($1 = 0.9502 Swiss francs)
($1 = 0.9502 Swiss francs)
