Credit Suisse: capital fix

This is it: Tidjane Thiam’s Big Plan. The Credit Suisse chief executive, three months into the job, has set out his strategy and is asking for CHF6 billion ($6.2 billion) of fresh equity to pay for it. Should shareholders give it to him?  Start with the capital. That equity issue will push its capital ratio from just over 10% to just over 12%, which is higher than many rivals. The idea is that the fundraising will sort out the issue once and for all. But regulatory capital demands are a moveable feast. The best that can be said is that it will quell concerns for now. Still, Mr Thiam is not fretting about the impact the extra capital will have on the bank’s return on equity (which came in at a paltry 7.1% in a very weak third quarter.) He has declined to set a new ROE target. Given how frequently banks miss such targets, that is a sound move.  So, anyone putting in money now will be getting a comfortably capitalised bank but an uncertain return on that ...