As the troubled lender looks to borrow money for the restructured firm, Credit Suisse Group AG (CSGN.S) is positioning its First Boston corporate finance arm to investors as a mega boutique and anticipates revenue soaring to as much as $3.5 billion, according to a company document.
The marketing pitch, which has not previously been revealed, reveals that the Swiss bank is placing its money on CS First Boston’s (CSFB) fast recovery after income fell by 69% in 2022.
The bank stated that it hopes to reach the $2.5 billion gross revenue target it just set forth last October for the unit in its sales pitch to investors, taking into consideration the fact that the business will be autonomous and assuming a normalised market situation.
The bank also goes into additional depth about how the reorganised company will be more competitive in the crowded investment banking sector. The presentation showed CSFB would be a super luxury, more specialised than big banks but more comprehensive than advising companies that don’t provide services like financing.
The pitch to shareholders comes as bankers predict a sluggish start to the year, following a substantial downturn in the deals market that affected several Wall Street businesses last year.
For the first time, it is revealed in the marketing pitch, which includes the parameters for its $500 million capital issue, that the Swiss bank intends to raise the money through a five-year interchangeable debt security with 6% yearly interest.
If there is a spin-off or original public offering, shareholders will have to convert their notes into stocks of CSFB.
The money will be acquired by the parent company, Credit Suisse.
In 2024 or 2025, the bank hopes to list CSFB on the stock market, according to a source with knowledge of the matter.
Credit Suisse refused to respond to this story’s questions.
In October of last year, Credit Suisse started a restructuring of the bank, which has lost billions of dollars due to a slew of scandals and is currently led by its third CEO in three years.
It intends to sell off risky investments and concentrate on lucrative industries like wealth management. The establishment of CSFB, which revives the First Boston brand that Credit Suisse had first invested in in 1988, is a significant component of the restructuring.
It is intended for CSFB to function as an independent financial market centred on integrity and a bank of advisory with a New York office. Michael Klein, a seasoned dealmaker, resigned from the Credit Suisse boards to take the CEO position.
CEO Ulrich Koerner claimed the bank had had a $500 million pledge from a partner in October when announcing the revamp, but he did not identify them.
It was unclear why Credit Suisse was looking for more investors when it already had a pledge for the entire amount for the capital issue.
The bank stated in the document that CSFB is reimagining its investment banking division.
A “treasury solutions” unit will manage bond sales and assist in funding a small number of clients, while an acquisition and strategy finance department would concentrate on financing deals.
Credit Suisse stated without offering any information that third-party capital would assist in funding the unit’s loans as a stand-alone firm.
At the same moment, Credit Suisse would stop engaging in some activities, such as non-essential trading and offering revolving credit lines to firms.
Additionally, the acquisition of Klein’s advising boutique, the Klein Group LLC, will “improve” CSFB. According to the presentation, since its founding in 2010, the company has provided advice on transactions totalling $1.5 trillion, including the IPO of Saudi Arabia’s largest oil company, Aramco (2223.SE).
The boutique would be purchased by Credit Suisse for a few hundred million dollars, according to a report published by Bloomberg News last month.
Klein opted not to respond when reached by a spokesman.