Credit Suisse Sells Debt Assets -- WSJ

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.

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.

Write to Matt Jarzemsky at [e-mail]

(END) Dow Jones Newswires

May 04, 2016 02:47 ET (06:47 GMT)

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