By Chris Dorrell
Long-standing Credit Suisse shareholder, Harris Associates, has sold its entire stake over the past few months, its chief investment officer David Herro has said.
Herro told the Financial Times the investor had lost patience with Credit Suisse’s strategy to stem persistent losses and its client exodus.
Herro had been a prominent supporter of Credit Suisse for years. Harris Associates owned as much as ten per cent of the bank’s stock last year.
The investor maintains a share in a number of other European banks, and Herro told the Financial Times that there are lots of attractive options in the sector.
“Rising interest rates mean lots of European financials are headed in the other direction,” Herro told the Financial Times. “Why go for something that is burning capital when the rest of the sector is now generating it?”
Harris said he was frustrated by the lack of transparency around the carveout of Credit Suisse’s investment bank and the agreement to sell its securitised products business to private equity group Apollo.
“We feel the plan to restructure the investment bank, while a noble cause, is cumbersome and far more costly in terms of cash burn than we expected,” Herro said.
“We were also not satisfied with what we were getting in terms of proceeds… from the sale of securitised products.”
Credit Suisse announced major restructuring plans last October amidst rumours it was in danger of collapsing. The firm sought a cash injection of £3.46bn from investors via a share sale backed by the Saudi National Bank, which is when Harris Associates started selling its stake
As part of the restructuring Credit Suisse plans to carve-out its investment banking business under a revived name, CS First Boston, in order to focus on wealth management.
In November last year, the lender sold its securitised products group to Apollo. In February, it acquired M.Klein & Company’s investment banking business for $175m (£144m).
Alongside the acquisition of M.Klein’s investment bank, Credit Suisse reported its biggest loss since the financial crisis in 2008, warning of a substantial loss this year too.
A Credit Suisse spokesperson said: “We are ahead of our plan and have clear strategic objectives. We are laser focused on successfully executing our plan and on progressing toward our targets to ensure new Credit Suisse delivers sustainable value for all our stakeholders.”
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