[ by Melanie Gretchen ]

Credit Suisse Group AG won't sell shares to raise equity, CEO Brady Dougan said in response to a central bank report on 6/14 calling for a "marked increase" in capital this year.  As the country's biggest banks braced for the possibility of the European debt crisis worsening, Mr. Dougan contended that his bank is one of the "safest banks."

Safety Measures. Among efforts by the Swiss government, the Swiss National Bank (SNB), and the market regulator, the SNB identified Credit Suisse as needing a bigger capital boost than larger rival UBS AG, and recommended a timeframe.  As a result, Credit Suisse shares fell 11% that day.

However, he defended the bank, and criticized the report by the SNB as incomplete.  He said the central bank didn't factor in 6 billion Swiss francs ($6.3 billion) of convertible securities when calculating its capital ratios, Dougan said.  Although those securities will be issued in 2013, including them would have produced a ratio of 7.9% rather than 5.9%. Going forward, the bank may continue to offer owners stock rather than cash as dividends to boost equity, Mr. Dougan told German newspaper SonntagsZeitung.

Performance Report: How Credit Suisse is Doing. To date, the CEO is confident the bank can achieve profit targets and will earn enough in coming quarters to boost capital, he said.  He attributed the difference between his assessment and the central bank's to a "very pessimistic scenario about the debt crisis" in the SNB stability report, he said.

"The SNB report unsettled customers and market participants. That’s not only bad for us, but for the entire financial center." -- Mr. Dougan.

In the Shadow of UBS. In 2008, the government and the central bank had to support UBS by allowing it to spin off risky assets into an SNB-sponsored fund.  During the crisis, UBS's writedowns and losses topped $57 billion, according to Bloomberg.  In context, its losses accounted for more than 3% of the net balance-sheet total, while loss-absorbing capital comprised about 1.7% of total assets at Credit Suisse and 2.7% at UBS at the end of March, according to the SNB in the report.

In contrast, Credit Suisse didn’t need any support from the tax payer throughout the crisis.  Rather, it has the highest capital ratio among its peers and its liquidity is "very good," Mr. Dougan said.

For further details, go to [Bloomberg, 6/17/12].