Credit Suisse (CSGN.S) announced the sale of most of its Securitized Products Group and related financial activities on Tuesday. This was an essential milestone in Credit Suisse’s overall effort to overhaul its operations. Credit Suisse sold to the American buyout group Apollo Global Management (APO.N).
The Deal Is Expected to Close by Mid-2023
As a result of this deal and the potential further sales of SPG’s portfolio to other parties, Credit Suisse’s stake in SPG is likely to decrease from $75 billion to $20 billion. Credit Suisse forecasted Apollo would pay more than the unannounced selling price. In addition, one of the essential capital ratios would rise due to the transaction.
The middle of 2023 is when Credit Suisse expects the deals to close. It further said that Apollo would hire most SPG staff. The Swiss financial institution will also provide financing for some of the assets sold to Apollo.
Experts have complained about the lack of openness. Although the offer is good, J.P. Morgan analysts want more information. Shares of Credit Suisse fell 1.1% in the first minutes of trade.
Eliminating Conflicts of Interest
Last month, the bank announced plans to solicit investors for $4 billion (Swiss francs). It also disclosed plans to fire thousands of employees. Additionally, the company aimed to shift its focus away from investment banking and toward affluent clients. This was done to move beyond years’ worth of controversy.
At that time the sale to Apollo received attention. Investors are taking a closer look at the purchase because Blythe Masters, a board member at Credit Suisse, may have a conflict of interest.
After her consulting work for Apollo, the company decided to invest in Motive. Masters founded the New York City-based investing company Motive. According to Credit Suisse, procedures have been made to avoid any possible conflicts.
Equal to 0.9435 CHF for every $1.
About Credit Suisse and Apollo Global Management
The Credit Suisse Group AG operates as an international investment bank and supplier of related financial services. It was founded in Switzerland, where it continues to have its principal office. It is headquartered in Zürich and has branches in all of the world’s major financial centers.
It provides services in private banking, asset management, investment banking, and shared services. Founded in the United States, Apollo Global Management, Inc. operates as a global private equity business. The firm invests in real estate, private equity, and credit and provides investment management services.