Credit Suisse CS -1.03%
Group AG is nearing a deal to sell its securitized-products group to heavyweight investors Apollo Global Management Inc.
and Pacific Investment Management Co. as part of a retreat from Wall Street, people familiar with the matter said.
The Swiss bank is set to give details of the sale, and other measures for a planned strategy change, on Thursday. The securitized-products group underwrites financing and packages up mortgage bonds and other securities for resale. It generated high returns but Credit Suisse executives said in July it wasn’t a good fit with its envisioned future shape.
Two bidding groups emerged as the favorites for the business, The Wall Street Journal earlier reported. One consortium included Pimco, a big bond manager, and Apollo,
a large alternative asset manager. It beat out a second group composed of Centerbridge Partners and Martello Re Ltd., a life and reinsurance company, according to some of the people familiar with the effort.
The Swiss bank is selling billions of dollars worth of assets to help pay for a strategy change after a series of financial losses and scandals. It may still need additional capital to add comfort for investors that it can carry out plans to retreat from some businesses and countries that are no longer deemed core and slash costs, analysts say.
One of the biggest disposals is Credit Suisse’s New York-based securitized-products group. The bank said in July it would sell all or part of the unit. Terms of the impending deal couldn’t be learned.
Credit Suisse is likely to keep a part of the business following the sale as some of it services other bank activities, some of the people said. The group’s assets, infrastructure and teams will move to the new owners, one of them said.
Credit Suisse has said it needs to get safer and leaner by shedding parts of its investment bank and focusing on its core business of wealth management for rich clients. It will update investors on the plan alongside its third-quarter results.
The restructuring is taking a page from other banks’ playbooks a decade ago, following the global financial crisis. Credit Suisse’s main rival, UBS Group AG
pared back to be a wealth manager with a smaller investment bank competing in targeted areas.
In addition to divesting the securitized-products group, Credit Suisse will exit from more than two dozen smaller wealth markets and put some assets in a resolution unit, the Journal previously reported.
The pending sale shows how investment firms are increasingly displacing Wall Street banks in financing companies and providing credit. Banks have pulled back from providing loans for risky leveraged buyouts, a hole that’s been at least partially filled by private credit providers.
The firm’s investment chief, Dan Ivascyn, bet successfully on a recovery in mortgage bonds in the years following the financial crisis.
Pimco, owned by Germany’s Allianz SE, oversees $1.7 trillion in assets, mostly in bonds and other fixed-income investments. Pimco’s CEO, Emmanuel Roman, is to form Goldman Sachs Group Inc.
executive who ran hedge-fund firm Man Group PLC before joining the California money manager.
Apollo managed $515 billion in assets as of June 30, with some $376 billion in its credit business.
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Appeared in the October 27, 2022, print edition as ‘Credit Suisse Nears Sale Of Unit.’