Credit Suisse to sell "significant" part of securitized products unit to Apollo

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Credit Suisse to sell "significant" part of securitized products unit to Apollo
Credit: © Reuters.

By Scott Kanowsky -- Credit Suisse Group AG (SIX: CSGN ) announced on Tuesday that it has agreed to sell a "significant" portion of its securitized products business and other related financing divisions to private equity group Apollo Global Management (NYSE: APO ).

The move comes as the embattled Swiss lender looks to move on from a string of scandals and a steep third-quarter loss by embarking on a wide-scale restructuring program that will see it slash jobs, "radically" overhaul its investment bank, and raise fresh capital.

In a statement, Credit Suisse did not specify how much the deals will be worth, but said they will reduce the securitized products unit's assets to around $20 billion from $75B. The transactions are expected to be completed by the middle of 2023.

Once finalized, the sales will also bring down Credit Suisse's risk-weighted assets by approximately $10B. Its CET1 capital ratio, a gauge of financial health, will be strengthened as well.

Credit Suisse said the announcement marks an "important step" towards a managed exit from the securitized products business, which has previously placed part of its focus on bundling up residential mortgages and reselling them as securities.

The bank added that it aims to de-risk its investment bank and release capital to invest in other "core businesses,", particularly its key private wealth unit.

Shares in Credit Suisse fell in early trading.

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