Bed Bath & Beyond seeks capital infusion, buyer ahead of likely bankruptcy

A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York, on Friday, Jan. 6, 2023.

Johnny Milano | Bloomberg | Getty Images

Bed Bath & Beyond has been in discussions with prospective buyers and lenders as it works to keep its business afloat during a likely bankruptcy filing, according to people familiar with the matter.

The retailer is in the midst a sale process in hopes of finding a buyer that would keep the doors open for both of its major chains, its namesake banner and Buybuy Baby, said the people, who weren’t authorized to discuss the matter publicly.

At the same time, Bed Bath has also been looking for a lender to provide financing that would keep the company going if it were to file for bankruptcy protection in the coming weeks, the people said.

A Bed Bath spokeswoman said Wednesday the company doesn’t comment on specific relationships but has been working with strategic advisers to evaluate all paths to regain market share and enhance liquidity.

“Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” the spokeswoman said, declining to comment further.

Options Action: Bed Bath & Beyond

A representative for AlixPartners, which CNBC recently reported was hired as the company’s advisor, declined to comment.

Earlier this month Bed Bath warned it may need to file for bankruptcy after its turnaround plans failed to substantially boost sales and repair its balance sheet. The company reported net losses that exceed $1.12 billion for the first nine months of the fiscal year. It’s blown through its liquidity in recent months, shouldered a heavy debt load, and faced strained relationships with its suppliers.

Comparable sales declined 32% year over year in the most recent fiscal quarter, ended Nov. 26. Company leaders said the company has had a harder time keeping shelves stocked, as vendors change payment terms or decide not to ship merchandise because of the retailer’s financial challenges.

Last week, CNBC reported Bed Bath had begun another round of layoffs in an attempt to further cut costs. The company had about 32,000 employees as of Feb. 26, 2022, according to public filings.

The company has been working to find a route that sees its chains survive, the people added. A day before Bed Bath issued a “going concern” warning, it announced in an employee memo that it had hired Shawn Hummell, a former Macy’s executive, to lead its namesake brand’s retail, store operations and merchandising operations as senior vice president of stores. Prior to his time at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer that underwent a turnaround.

One possible buyer circling Bed Bath is private equity firm Sycamore Partners, according to the people familiar with the discussions. Sycamore is particularly interested in Buybuy Baby, Bed Bath’s banner for infants and toddlers, which has outperformed the broader company. Buybuy Baby has been deemed most likely to survive going forward, the people said.

Still, a sale of Bed Bath as a whole remains on the table — albeit with a much smaller footprint of stores than it currently has, the people said.

Sycamore is known for acquiring retailers, like women’s apparel chain Talbots, including distressed companies that have sought bankruptcy attention like Ascena’s Ann Taylor. A Sycamore Partners spokesperson declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.

Bed Bath has also drawn interest from companies that acquire the intellectual property, or brands, of companies, particularly those under distress, the people said. Authentic Brands, which has frequented many bankruptcy-run sales for retailers like Forever 21, has also been looking at Bed Bath, the people said. A representative for Authentic Brands declined to comment.

Short of a sale, the company and its advisors have been looking to nail down additional financing for a bankruptcy filing, which could occur in the coming weeks, the people said. The company’s advisors are looking for a loan of at least $100 million, one of the people said.

Last year, Bed Bath received $375 million in new funding from lender Sixth Street Partners, which has provided financing to other retailers like J.C. Penney and Designer Brands.

Sixth Street’s facility could be converted into bankruptcy financing, the people said, or the lender or others could convert their debt to equity and become Bed Bath’s owner. A representative for Sixth Street declined to comment.

Bed Bath’s financing strategy comes as fellow retailer Party City sought Chapter 11 protection this week. Also with a hefty debt load, Party City is looking to restructure its balance sheet and move forward with a smaller footprint.

Bankruptcy attorney Eric Snyder from law firm Wilk Auslander said a sale was unrealistic for Bed Bath due to its declining sales and inventory, as well as its expanded losses.

“They don’t have the availability to right the ship, and they don’t have the cash to continue to operate,” Snyder said. “I just don’t see any other option other than a bankruptcy and a liquidation.”

—CNBC’s Melissa Repko contributed to this report.

New Jersey deli defendant Peter Coker arrested in Thailand

Your Hometown Deli in Paulsboro, N.J.

Google Earth

A fugitive facing federal criminal stock-manipulation charges in the United States in connection with a small New Jersey deli whose parent company was once preposterously valued at $100 million has been arrested by authorities in a resort area of Thailand.

Peter Coker Jr., who last was known to be living in Hong Kong, his father and another man are charged in the case involving the deli owner, Hometown International, and a related shell company, E-Waste.

The Bangkok Post first reported that Coker Jr., 54, was arrested on Jan. 11 in a hotel room in the Thalang district of Phuket province, Thailand.

“I can confirm it happened,” Matt Reilly, a spokesman for the U.S. Attorney’s Office in New Jersey, told CNBC in an email Wednesday.

Coker Jr.’s father, Peter Coker Sr., 83, and a third defendant, 63-year-old James Patten, were arrested in the case in September in North Carolina. The elder Coker and Patten since then have made appearances in New Jersey federal court, most recently Tuesday, remotely via Zoom for a hearing in the Camden courthouse.

The trio are accused of fraudulently pumping up the value of the publicly traded companies, which were being marketed as candidates for mergers with private companies.

The Bangkok Post reported that Coker Jr. was arrested pursuant to so-called red and black notices issued by the International Criminal Police Organization, Interpol.

Thai police, working with the FBI, arrested Coker Jr. after tracking him to the hotel, The Post reported.

Coker Jr. had served as chairman of Hometown International, whose sole asset for years was the Your Hometown Deli in Paulsboro, New Jersey.

His father was a major shareholder in the company, which in 2021 had a stock market capitalization of $100 million despite the deli having less than $40,000 in total annual revenue.

Prosecutors have said that the Cokers and Patten “artificially inflated” the values of Hometown International and E-Waste stock by 939% and 19,900% respectively through manipulated trades in shares.

What the debt ceiling is, and how a standoff may affect consumers

U.S. Treasury Secretary Janet Yellen on Jan. 10, 2023 in Washington.

Kevin Dietsch | Getty Images News | Getty Images

The U.S. may be about to hit its debt ceiling.

Treasury Secretary Janet Yellen said last week that the U.S. would likely hit the ceiling Thursday. Absent steps taken by Congress, the event may “cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability,” she wrote in a letter to new House Speaker Kevin McCarthy, R-Calif.

Here’s what the debt ceiling is, and what makes it so important for consumers.

What is the debt ceiling?

Why is the debt ceiling an issue right now?

The House debt ceiling debate ramps up

A default would occur if the U.S. runs out of money to meet all its financial obligations on time — for instance, missing a payment to investors who hold U.S. Treasury bonds. The U.S. issues bonds to raise money to finance its operations.

The U.S. has defaulted on its debt just once before, in 1979. A technical bookkeeping glitch resulted in delayed bond payments, an error that was quickly rectified and only affected a small share of investors, the Treasury said.

However, the U.S. has never “intentionally” defaulted on its debt, CEA economists said. This outcome is the one Yellen warned would cause “irreparable harm.” The scope of negative shockwaves is unknown since it hasn’t happened before, economists said.  

“The fallout is serious,” said Mark Zandi, chief economist at Moody’s Analytics.

“It would create chaos in financial markets and completely undermine the economy,” he added. “The economy would go into a severe recession.”

Fallout: Frozen benefits, a recession, pricier borrowing

An exact default date is difficult to pinpoint, due to the volatility of government payments and revenues. But it’s unlikely to happen before early June, Yellen said.

Congress can raise or temporarily suspend the debt ceiling in the interim to avert a debt-ceiling crisis — something lawmakers have done many times in the past. But political impasse calls their ability or willingness to do so into question this time around.   

[A default] would create chaos in financial markets and completely undermine the economy.

Mark Zandi

chief economist at Moody’s Analytics

If the U.S. were to default, it would send several negative shock waves through the U.S. and global economies.

Here are some of the ways it could affect consumers and investors:

1. Frozen federal benefits

Tens of millions of American households might not get certain federal benefits — such as Social Security, Medicare and Medicaid, and federal aid related to nutrition, veterans and housing — on time or at all, the CEA said. Government functions such as national defense may be affected, if the salaries of active-duty military personnel are frozen, for example.

2. A recession, with job cuts

Affected households would have less cash on hand to pump into the U.S. economy — and a recession “would seem to be inevitable” under these circumstances, Hamrick said. Recession would be accompanied by thousands of lost jobs and higher unemployment.

3. Higher borrowing costs

Investors generally view U.S. Treasury bonds and the U.S. dollar as safe havens. Bondholders are confident the U.S. will give their money back with interest on time.

“It’s sacrosanct in the U.S. financial system that U.S. Treasury debt is risk-free,” Zandi said.

If that’s no longer the case, ratings agencies would likely downgrade the U.S.’ sterling credit rating, and people will demand much higher interest rates on Treasury bonds to compensate for the additional risk, Zandi said.

Borrowing costs would rise for American consumers, since rates on mortgages, credit cards, auto loans and other types of consumer debt are linked to movements in the U.S. Treasury market. Businesses would also pay higher interest rates on their loans.

4. Extreme stock market volatility

Of course, that’s assuming businesses and consumers could get credit. There might also be a “severe” financial crisis if the U.S. government is unable to issue additional Treasury bonds, which are an essential component of the financial system, Hamrick said.

“A default would send shock waves through global financial markets and would likely cause credit markets worldwide to freeze up and stock markets to plunge,” the CEA said.

Even the threat of a default during the 2011 debt ceiling “crisis” caused Standard & Poor’s (now known as S&P Global Ratings) to downgrade the credit rating of U.S. and generated considerable market gyrations. Mortgage rates rose by 0.7 to 0.8 percentage points for two months, and fell slowly thereafter, the CEA said.

Palantir CEO hits out at tech workers critical of its government work

Alex Karp, CEO of Palantir, on day two of the World Economic Forum in Davos, Switzerland.

Stefan Wermuth | Bloomberg | Getty Images

Palantir co-founder and CEO Alex Karp knows many tech workers in Silicon Valley have misgivings about his data mining firm’s dealings with intelligence agencies and the military.

He has a message for them.

“You may not agree with that and, bless you, don’t work here,” Karp said at the World Economic Forum in Davos in a conversation with David Rubenstein, co-chairman of private equity firm The Carlyle Group.

Palantir sells software to government and private sector organizations that helps them analyze large quantities of data. For years, the firm has been closely tied to government work, often secretive in nature.

Karp on Wednesday defended his company’s work with the military and other government agencies, which he said helped reduce terrorism and defeat “human rights abuses largely done by adversaries to the West.”

Tech workers have been more vocal in recent years in opposing their employers’ contracts with the military. Microsoft, Google, Amazon and Salesforce have all faced pushback over controversial deals.

Palantir has tried to set itself apart from the pack, welcoming government work in the name of patriotism. In 2020, Palantir moved its headquarters from Palo Alto, California, to Denver, Colorado, months after Karp complained publicly to Axios on HBO about what he called the “increasing intolerance and monoculture of Silicon Valley.”

Two-thirds of people in Silicon Valley don’t want to work for companies like Palantir, Karp said in Davos. However, he added, “one-third only wants to work for your company.”

“We are not everyone’s cup of tea, we may not be your cup of tea,” Karp said.

Karp, who founded the company with Peter Thiel and others in 2003, advocates for the use of technology in national defense.

“We don’t like people who are coming in and saying, we want to kill terrorists and just without data protection,” Karp said. “Bless your soul if you want to distribute carcinogens with your great intellect in the form of consumer internet.”

The logo of big data company Palantir.

Fabrice Coffrini | AFP via Getty Images

The Central Intelligence Agency was an early investor in Palantir. Along with the Federal Bureau of Investigation and National Security Agency, the CIA is among the company’s clients.

Since 2014, Palantir has worked with the U.S. Immigration and Customs Enforcement (ICE) to identify undocumented immigrants, prompting some employee protests.

“We want people who want to be on the side of the West,” Karp said. “And that’s not for everyone.”

Karp said Palantir has assisted the Ukraine military with its MetaConstellation product, which he said allows defense specialists to “use algorithms on large data sets to hone in on adversaries.”

Palantir, which went public on the New York Stock Exchange in September 2020, has lost more than half its value in the past year alongside a broader downturn in technology shares.

Revenue in the third quarter rose 22% to $478 million, slightly above analysts’ expectations. In recent years, the company has diversified into the private sector and, as of the third quarter, is now serving 132 commercial customers, up from 59 a year earlier.

— CNBC’s Ashley Capoot and Cameron Costa contributed to this report

WATCH: Palantir CEO Alex Karp discusses economic and geopolitical outlook

Palantir CEO Alex Karp discusses economic and geopolitical outlook from Davos

We welcome Cisco CEO’s upbeat view on the economy

Chuck Robbins, CEO & Chairman of Cisco, speaking on Squawk Box at the WEF in Davos, Switzerland on Jan. 18th, 2023.

Adam Galica | CNBC

The chief executive of Club holding Cisco Systems (CSCO) on Wednesday continued to strike a confident note on the economy, while indicating that the company’s enterprise customers haven’t notably pulled back on spending for its network routers and cloud offerings. Those are welcomed comments from the head of a company long seen as an economic bellwether, given the breadth of its customer base.

Sales fall short of expectations

Shoppers walk through the Urbanspace Holiday Shops at Bryant Park in New York, U.S., on Sunday, Dec. 12, 2021.

Gabby Jones | Bloomberg | Getty Images

Holiday sales fell short of industry expectations, as shoppers felt pinched by inflation and rising interest rates, according to data from the National Retail Federation.

Sales during November and December grew 5.3% year over year to $936.3 billion, below the major trade group’s prediction for growth of between 6% and 8% over the year prior. In early November, NRF had projected spending of between $942.6 billion and $960.4 billion.

The retail sales number excludes spending at automobile dealers, gasoline stations and restaurants and is based on data from the U.S. Census Bureau. It covers the period from Nov. 1 to Dec. 31.

The holiday sales gains include the impact of inflation, which drives up total sales. The consumer price index, which measures the cost of a broad mix of goods and services, was up 6.5% in December compared with a year ago, according to the Labor Department.

For retailers, the shopping season’s results reflect the challenges ahead. As Americans continue to pay higher prices for groceries, housing and more month after month, they are racking up credit card balances, spending down savings and having fewer dollars for discretionary spending.

Plus, retailers are following years of extraordinary spending. During the pandemic, Americans fought boredom and used stimulus checks by buying loungewear, throw pillows, kitchen supplies, home theater systems and more.

That translated to sharp year-over-year jumps in retail sales in the past two holiday seasons — a 14.1% gain in 2021 and 8.3% gain in 2020. On average, holidays sales have grown by 4.9% annually over the past decade, according to NRF.

NRF Chief Executive Matt Shay said those upward leaps were unsustainable, especially as people return to commuting, going out to dinner and booking vacations again. Plus, he said, Americans are paying higher prices across the board, from pricier rents to more expensive groceries.

“It just signals that consumers continue to be cost-conscious,” Shay told CNBC. “They’re feeling it. They’re aware of the pressures of managing their daily, weekly, monthly expenses.”

Sales rose in most major retail categories during the holiday season. Online and non-store sales saw the biggest year-over-year gains, with sales jumping 9.5% during the holiday season. Sales at grocery and beverage stores, which have had significant price increases, rose 7.8% versus the year-ago period.

Demand in some categories noticeably weakened. Sales at furniture and home furnishings stores declined 1.1% and sales at electronics and appliances stores dropped 5.7% year over year.

Shay said in the year ahead, retailers will have to work harder to attract and retain customers.

“There’s a premium on execution,” he said. “Everyone will not be a winner in an environment in which consumers are more selective.”

Solomon says Goldman took on too much too quickly in consumer business

Goldman Sachs CEO: We had a disappointing quarter and we own that

Goldman Sachs CEO David Solomon told CNBC on Wednesday that his firm suffered an upsetting quarter partly due to its overly ambitious consumer efforts.

“We obviously had a disappointing quarter, and we tried to own that, you know, up front,” Solomon said Wednesday on CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland.

The New York-based investment bank on Tuesday posted its largest earnings miss in a decade as revenue fell and expenses and loan loss provisions came in higher than expected.

Goldman said quarterly profit plunged 66% from a year earlier to $1.33 billion, or $3.32 per share, about 39% below the consensus estimate. That made for the largest EPS miss since October 2011, according to Refinitiv data.

“In the consumer platforms, we did some things right. We didn’t execute on some others,” Solomon said. “We probably took on more than we should have, you know, too much, too quickly.”

Building and expanding its consumer banking business has turned out to be more challenging than expected. Goldman last year pivoted away from its previous strategy of building a full-scale digital bank called Marcus. Meanwhile, winning the Apple Card account in 2019 has proven less profitable than Goldman executives expected.

“I think we now have a very good deposits business,” Solomon said. “We’re working on our cards platform, and I think the partnership with Apple is going to pay meaningful dividends for the firm.”

Apart from its consumer platforms, Solomon said Goldman’s performance in asset management and lending was solid relative to its peers.

“Our relative asset growth and the performance of core business is actually quite good when you stand it up against peers,” Solomon said. “So we’re raising a lot of money serving clients — growing — that there’s a lot of opportunity for us in the asset management business.”

The bank posted an 11% return on average tangible common shareholders’ equity for 2022. The key profitability metric is well below the 15%-17% returns of Goldman’s medium-term targets. 

Ripple CEO optimistic crypto firm will get SEC XRP lawsuit ruling soon

Ripple's CEO is hopeful SEC case will conclude in first half

The head of cryptocurrency and blockchain company Ripple, Brad Garlinghouse says he is hopeful a resolution will be reached in its spat with the U.S. Securities and Exchange Commission within the first half of 2023.

“Judges take however long the judges will take,” Garlinghouse, who is a defendant in the legal drama, said in an interview with CNBC’s “Squawk Box Europe” Wednesday at the World Economic Forum in Davos, Switzerland. “We’re optimistic that this will certainly be resolved in 2023, and maybe [in] the first half. So we’ll see how it plays out from here. But I feel very good about where we are relative to the law and the facts.”

The U.S. Securities and Exchange Commission initiated a lawsuit against Ripple in 2020, alleging that the company and its executives illegally sold XRP — a cryptocurrency created in 2012 — to investors without first registering it as a security.

Ripple disputes the claim, saying that the token should not be considered an investment contract and is used in its business to facilitate cross-border transactions between banks and other financial institutions.

In December, Ripple and the SEC submitted their final round of briefs seeking a summary judgment to the case, respectively accusing each other of stretching the law.

The judge could make a ruling in favor of either side, avoiding a trial, or put the matter before a jury.

Ripple CEO Brad Garlinghouse speaks during the Milken Institute Global Conference in Beverly Hills, California, on Oct. 19, 2021.

Kyle Grillot | Bloomberg | Getty Images

Garlinghouse said that he expects a ruling to arrive “some time in the coming single digit months” — potentially as soon as June. He added that he doesn’t expect the company will settle the case, although he remains open to the prospect.

“We have always said that we would love to settle, but it requires one very important thing, and that is that, on a go-forward basis, it’s clear that XRP is not a security,” Garlinghouse said. “The SEC and Gary Gensler has very outwardly said he views almost all crypto as a security. And so that leaves very little space in the Venn diagram for settlement.”

At a September event organized by the Practising Law Institute, Gensler said that the “vast majority” of cryptocurrency tokens are securities.

He subsequently hinted that ether may also qualify as a security. Without referring to it by name, Gensler told reporters in September that crypto “staking” mechanisms — which reward users who deposit their tokens to secure blockchain networks with interest-like payments — should count as securities offerings, since “the investing public is anticipating profits based on the efforts of others.” Ethereum, the network behind the world’s second-largest cryptocurrency, switched to such a model last year.

The only cryptocurrency that the agency has made clear it doesn’t view as a security is bitcoin. Gensler previously stated that the world’s biggest cryptocurrency has “no group of individuals in the middle,” meaning investors aren’t “betting” on an intermediary.

Ripple CEO: 2022 will go down as one of the worst years for crypto

The XRP case has important implications for both Ripple and the broader crypto market.

A judgment pronouncing XRP a security could potentially impose much stricter curbs on Ripple with respect to the token. This could include requirements for transparency disclosures and greater investor protections, akin to those imposed on regulated broker-dealers.

It may also set a precedent for dozens of other crypto and blockchain projects that could potentially be classified as securities.

Stressing the significance of the lawsuit’s outcome, Garlinghouse said on Wednesday, “Something I’ve heard here in Davos repeatedly is how important this is not just to Ripple… but also, really, the whole crypto industry in the United States.”

He added, “I keep reminding people that outside the United States, crypto is still thriving, Ripple’s still thriving, and we should make sure we’re continuing to engage non-U.S. regulators as well.”

‘Embarrassing’ behavior

In a separate fireside discussion with CNBC’s Arjun Kharpal Wednesday, Garlinghouse issued a stern rebuke of the SEC’s legal battle with his firm, saying the conduct of the watchdog so far had been “embarrassing.”

“From the beginning, I thought it was very clear that the facts were on our side, that the law was on our side,” he said. “And I think as you have seen this play out, as you have seen the filings in the court, that the judge certainly is hearing our arguments.”

Ripple CEO: SEC behavior in XRP lawsuit has been 'embarrassing'

He went on, “The SEC’s behavior in some of it has been embarrassing as a U.S. citizen. Just some of the things that have been happening, like you’ve got to be kidding.”

He said the U.S. is “notably absent” from the list of regulators developing crypto-friendly rules. The United Arab Emirates, Japan, Singapore, Switzerland and U.K. are some of the forerunners in this respect, in his view.

As part of the legal proceedings, Ripple fought to obtain documents related to a June 2018 speech from former SEC official Bill Hinman, which it says have aided the case. In the speech, Hinman says that sales of rival ether “are not securities transactions.”

XRP was once the third-largest cryptocurrency, commanding a $120 billion market value in early 2018. It has dropped sharply since, amid U.S. regulatory scrutiny and a wider downturn in bitcoin and other digital currencies. XRP now has a market capitalization of roughly $20 billion, according to CoinMarketCap data.

Aramco chief warns of oil supply shortages as Chinese demand to surge

Aramco CEO warns of industry’s ability to mitigate future supply shocks as spare capacity erodes

The chief of the world’s largest oil company is worried about global crude supplies.

Current market dynamics — such as China’s slowdown and an aviation sector that is still recovering from the Covid-19 pandemic — have kept demand relatively subdued, but that is set to change soon. Saudi Aramco CEO Amin Nasser fears the world won’t have enough spare capacity to deal with that shift.

“For crude oil, we are in a situation where there is a spare capacity that is helping to mitigate interruptions,” Nasser told CNBC’s Hadley Gamble. “However, I am not so sure about the mid-to-long term, because as the spare capacity erodes, we will not be having the capability to mitigate any short or long term interruptions like what happened with Russia-Ukraine crisis.”

Aramco pumps about 10% of the world’s crude oil supply. It has a maximum capacity to pump 12 million barrels of crude per day, Nasser said, and is working on increasing that by a further million barrels per day. Still, he says, “We should be worried about the mid to long term. I think there will be an issue in meeting the growing demand.”

The latest oil market report from the International Energy Agency out Wednesday forecast global oil demand will increase by 1.9 million barrels per day in 2023 to reach a record 101.7 million barrels per day — with nearly half of that coming from China. The agency meanwhile expects oil supply growth to slow to 1 million barrels per day in that same period.

Europe has a lot of work to do before it becomes energy independent, Cepsa CEO says

While Aramco is working on building additional production capacity, “I don’t think it is enough investment to bring additional capacity that will be needed to supply the market,” Nasser said. “It will not mitigate a situation where the demand is growing and offsetting the decline. You need additional investment elsewhere, globally, to meet global demand.”

Investment in hydrocarbons has decreased amid a focus on decarbonization, and government regulations in many countries discourage fossil fuel exploration and drilling. Saudi Arabia and many of its partners in the OPEC producers’ alliance have repeatedly called for simultaneous investment in hydrocarbons and in the energy transition to avoid a future supply squeeze.

The looming supply-demand dynamic could bolster prices. Maarten Wetselaar, chief executive of Spanish oil company Cepsa, on Wednesday predicted that the crude oil price would return to triple-digits in the second half of 2023. Front-month Ice Brent crude futures were trading near $87.36 per barrel at midday in London.

Additional investment is needed globally to meet oil demand, Aramco CEO says

“Think about it this way,” Nasser said. “Today we have around 2 million barrels of spare capacity. The aviation industry is 1 million barrels below pre-Covid level. As [the] aviation industry picks up in 2023-24, that’s an additional 1 million barrels. [Consider] China opening up and that will really add a lot to the demand side.”

He stressed, “So all of these indicators now, without looming recessions — if economies start picking up and improving, that will also require additional supply. So you need additional investment to prepare for what’s coming.”

Credit Suisse CEO says outflows have reduced ‘very significantly’ as overhaul progresses

Switzerland’s second largest bank Credit Suisse is seen here next to a Swiss flag in downtown Geneva.

Fabrice Coffrini | AFP | Getty Images

Credit Suisse is seeing a sharp reduction in client outflows, as the embattled Swiss lender progresses with its major strategic overhaul, new CEO Ulrich Koerner told CNBC on Wednesday.

The bank in November projected a $1.6 billion fourth-quarter loss after announcing a raft of measures to address persistent underperformance in its investment bank and a series of risk and compliance failures. It also revealed at the time that it had continued to experience substantial net asset outflows.

“The outflows, as we said, have reduced very significantly, and we are seeing now money coming back in different parts of the firm,” Koerner said on the sidelines of the World Economic Forum in Davos, Switzerland.

As part of the overhaul, Credit Suisse shareholders in November greenlit a $4.2 billion capital raise, including a new private share offering that will see the Saudi National Bank become the largest interest holder, with a 9.9% stake.

Koerner said the transformation towards a “new Credit Suisse” was going well.

“We laid out a very clear plan, and we talked to all different stakeholder groups in the last three months, as you would expect,” he said.

“I think the plan, the strategy resonates very much. We are in full execution swing, so I think we are making really good progress.”

A more normalized interest rate environment is much better for the world, Credit Suisse CEO Körner says

Credit Suisse has also reached out to tens of thousands of clients in Switzerland and around the world for feedback, Koerner said.

“That has generated very positive momentum, and I think this is momentum that travels with us through 2023,” he added.

‘Zero concerns’ over Klein business acquisition

Koerner confirmed that the reported departure of 10% of Credit Suisse’s investment bankers in Europe was part of its previously announced plans to cut 2,700 jobs by 2023 and reduce headcount by a total 9,000 by 2025.

As part of the overhaul, Credit Suisse will spin off and rebrand its U.S. investment banking division as CS First Boston. The new unit will be headed by former Credit Suisse board member Michael Klein. Credit Suisse is reportedly on the verge of buying Klein’s boutique investment advisory firm.

Koerner insisted that he had “zero concerns” about conflicts of interest, stressing that the bank could deal with the situation “in the utmost professional way.”

“I am really looking forward for Michael to join, because Michael is an excellent banker, he is an excellent dealmaker, and he is very entrepreneurial, and that is why I want to go together with him on a journey.”

U.S. investor Harris Associates has more than halved its stake in Credit Suisse since June 2022. Koerner said he could not judge the firm for its timing, but “we will certainly have discussions.”