Credit Suisse proposes to buy back more stock

Chief executive Oswald Grübel wants to grow the business Keystone

The Credit Suisse Group plans to return up to SFr8 billion ($6.39 billion) to shareholders over three years after selling its Winterthur insurance arm last year.

At a presentation for investors in Zurich on Monday, the group’s chief executive Oswald Grübel ruled out making any major acquisitions, preferring to return any excess capital to shareholders.

However, he did not rule out making small-scale purchases.

“We will… invest in businesses which fit our model and where we see the best long-term, sustainable returns,” he told the investors’ event.

Earlier, a statement from Switzerland’s second-largest bank cited Grübel as holding out for the possibility of “selected smaller acquisitions and partnerships”.

“The creation of an integrated bank and the sale of Winterthur means that we have a clear strategic focus on the growth of our banking business.”

In December, Credit Suisse paid SFr358 million in cash to buy the Hedging-Griffo wealth manager in Brazil, a player that manages about SFr9.2 billion on behalf of wealthy clients.

Leading presence

“We already have a leading presence in Europe and North America, as well as in rapidly developing emerging markets such as Brazil, Mexico, China, Russia and the Middle East,” Grübel said.

“We will continue to leverage our strong position as an integrated bank in our existing markets and we will target new high-growth regions throughout the world.”

Credit Suisse sold Winterthur to France’s AXA last June for SFr12.3 billion and had about SFr8 billion still available for investment or for return to shareholders, after making provisions for core capital.

The bank also said it plans to complete its current SFr6 billion share buyback in the second quarter of this year and proposed paying a dividend of SFr2.24 per share as well as a par reduction of SFr0.46 per share.

“I think it’s great news. I was expecting SFr5-7 billion,” said Claudia Meier, head banking analyst at Bank Vontobel.

“However, the fact that it is over three years might be a little less positive,” she added.

Profit target

The bank, which is due to report its full 2006 figures on February 15, said it was sticking to a SFr8.2 billion net profit target for this year, a 40 per cent increase over 2005.

A one-brand strategy launched last year was delivering cost savings ahead of schedule, according to Renato Fassbind, Credit Suisse’s chief financial officer.

He said he was confident that SFr600 million in savings could be achieved in 2007, a year earlier than planned.

An ambitious cost-cutting programme across the business was yielding big savings but would not be allowed to compromise the business, bank executives said.

“This isn’t about cost cutting for its own sake. It’s about improving operating efficiency so we can invest for future growth,” the bank’s chief operating officer, Urs Rohner, said.

swissinfo with agencies

Key facts

Credit Suisse announced it would make investments in the expansion of its global presence as an integrated bank.
It plans a SFr8 billion share buyback programme.
It is proposing a dividend of SFr2.24 per share for the financial year 2006 and a par value reduction of SFr0.46 per share.
Credit Suisse Group reported net income of SFr6.7 billion for the first nine months of 2006 and net income of SFr1.9 billion for the third quarter.
Full 2006 results are expected on February 15, with the annual shareholders’ meeting on May 4.