Credit Suisse offers to buy back up to £2.7bn of its own debt

Credit Suisse has offered to buy back up to £2.7bn of its own debt in a bid to calm nervous investors.

The troubled bank announced the symbolic move after a scorching six months in which its shares plunged nearly 40 percent amid fears it will have to raise funds for a drastic restructuring.

Earlier this week, the price of its credit default swaps – financial instruments bought by investors that essentially act as insurance if a company forgoes its debt – rose, a sign that shareholders were increasingly concerned about Credit Suisse’s future.

In an attempted show of strength, the lender said yesterday it would buy back some of its bonds from investors to reduce its debt and prove it wasn’t struggling for cash.

Analysts at Saxo Bank said it was “trying to bolster sentiment by buying back credit”.

Credit Suisse has been weighed down in recent years by its involvement in a series of scandals, from the collapse of Greensill Capital to the implosion of hedge fund Archegos.

The bank has shaken up its board, claiming it is improving its risk management practices, but new chief executive Ulrich Korner is expected to announce a more radical plan in the coming weeks.

Despite Credit Suisse’s attempt at showing strength, social media speculation continued to swirl about the lender’s financial health, with some comparing the bond-buying offer to a similar move by Deutsche Bank when it closed with the lender in 2016. was back against the wall.

The German lender had to scale down its activities after a series of regulatory fines and did not return to annual profits until 2021. Dixit Joshi, a former director of Deutsche, recently joined Credit Suisse as finance boss.

But Credit Suisse investors seemed to have softened — and shares rose 5.4 percent.

Tensions among investors and customers ran so high that top executives went out of their way last weekend to reassure them about how much the overhaul would cost.

Analysts have speculated that the bank will have to raise up to £3.7bn to pay for Korner’s restructuring plan.

Credit Suisse has also put up for sale the five-star Savoy hotel it owns in central Zurich, raising even more concerns that it is facing a cash shortage.

In a statement, the lender said its bond repurchase offers were “consistent with our proactive approach to managing our overall liability composition and optimizing interest costs and enabling us to take advantage of market conditions to repurchase debt at attractive prices’.