Credit Suisse Agrees to Sell Distressed-Debt Portfolio to TSSP for $1.27 Billion -- Sources
May 03 2016 - 8:55PM
Dow Jones News
By Matt Jarzemsky
Credit Suisse Group AG agreed to sell a big chunk of
distressed-debt
assets, helping to speed the Swiss bank's retreat from
risky trading businesses.
TSSP, a credit-investing affiliate of private-equity firm TPG,
will
pay about $1.27 billion for part of Credit Suisse's
distressed-credit
portfolio, according to people familiar with the matter. The
deal
could be announced as early as Tuesday, they said.
Credit Suisse Chief Executive Tidjane Thiam has opted to ditch
much
of the bank's distressed-debt business. It is part of a move to
strip
tens of billions of dollars in risk-weighted assets from the
bank's
trading unit after it suffered steep losses in a business that
trades
bonds, issues debt and packages loans into customized
securities.
The bank has been hurt by soured loans to companies at various
stages
of restructuring in the energy, utilities and housing
industries, The
Wall Street Journal has reported.
As a result of challenges it is facing, Credit Suisse is
slashing
employees and costs as Mr. Thiam steers the bank toward the
more
stable business of wealth management.
The portfolio being sold includes 270 bonds, loans and other
instruments related to about 170 companies globally, the people
said.
As part of the deal, Credit Suisse plans to take a charge of
about
$100 million, most of which will be reflected in its
first-quarter
results. It had already announced $99 million of write-downs
related
to the distressed portfolio.
Credit Suisse's head of U.S. credit trading, Bob Franz, and its
head
of distressed research and trading, Ken Hoffman, will leave the
bank
and start a new asset-management firm that will help service
the
distressed assets, the people said.
Private-equity firms have been on the hunt to buy Wall
Street
businesses as big banks face regulations limiting their ability
to
profit from riskier operations.
TSSP was co-founded in 2009 by Alan Waxman, the former co-head
of a
Goldman Sachs Group Inc. group that invested the firm's own
capital in
distressed and special-situations investments.
In a sign of the complexity of the Credit Suisse transaction,
TSSP
dedicated nearly four dozen people to its examination of the
portfolio.
(END) Dow Jones Newswires
May 03, 2016 21:40 ET (01:40 GMT)
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