Tidjane Thiam. Picture: REUTERS/ARND WIEGMANN
Tidjane Thiam. Picture: REUTERS/ARND WIEGMANN

Credit Suisse  has moved to shore up confidence among investors by launching a share buyback of up to Sf3bn ($3bn) over the next two years, as the Swiss banking giant confronts a steep drop in its share price.

The Swiss banking giant will buy 1-billion to 1.5-billion francs in shares in 2019, it said on Wednesday ahead of its investor day seminar in London. It expected to buy a similar amount in 2020, subject to market conditions, and will raise its dividend 5% annually starting in 2019.

Analysts said the share buyback was in line with their expectations. Wednesday’s meeting with analysts and investors came at the end of a three-year restructuring launched by CEO Tidjane Thiam, who joined the bank in mid-2015.

Under the revamp, Credit Suisse geared its business toward wealth management while streamlining its investment-banking unit. After three straight annual losses until 2017 —brought on by restructuring charges, legal settlements and, in 2017,  l US corporate tax changes — the bank is on track to turn a profit in 2018.

“The actions taken during the restructuring mean that the bank is now more resilient in the face of market turbulence,” Thiam said. Still, after rising sharply from the middle of 2016 into 2017, Credit Suisse’s share price has fallen by more than one third since the start of 2018.

Shares of its Swiss rival UBS Group have declined by a slightly smaller rate. Swiss banks have struggled in 2018 as they continued to shift their business models toward managing money for wealthy clients around the world. The costs associated with these strategic changes have been exacerbated by negative interest rates in Switzerland — which have cost the banks more than Sf5bn in the past four years — and tight regulatory requirements that have capped growth in parts of their businesses.

Doubts about Credit Suisse’s global markets unit, which posted a pretax loss of Sf96m last quarter, have added to pressure on its share price.

The bank said it sees a positive long-term outlook for the global economy, “albeit at a lower level” and that it was mindful of “short-term headwinds” from trade tensions and changes to central banks’ policies.

Wall Street Journal