Saudi National Bank, the largest shareholder of Credit Suisse, has lost around 80 per cent of its investment. Credit Suisse, which failed over the weekend, got acquired by its rival UBS Group AG, Switzerland's largest banking group in a Swiss-government brokered deal for shade above $3.25 billion, or a 60 per cent discount to its share price. Credit Suisse was valued at $8.7 billion at a closing price of 1.86 Swiss francs on Friday.
Riyadh-based Saudi National Bank has a 9.9 per cent stake in the Swiss bank. It invested 1.4 billion Swiss francs ($1.5 billion) in November 2022 at 3.82 francs per piece.
UBS has agreed to buy Credit Suisse for $3.25 billion, under which UBS will be paying the shareholders 0.76 francs per share. That means Saudi National Bank is set to lose $1.2 billion, which is about 80 per cent of its investment.
However, in an official statement, Saudi National Bank said that there was a “nil impact on profitability” from a “regulatory capital perspective”, a CNBC report said
“As of December 2022, SNB’s investment in Credit Suisse constituted less than 0.5 per cent of SNB’s total Assets, and c. 1.7% of SNB’s investments portfolio,” the statement said.
There was “nil impact on profitability” from a “regulatory capital perspective.”
“Changes in the valuation of SNB’s investment in Credit Suisse have no impact on SNB’s growth plans and forward looking 2023 guidance,” it added.
The Qatar Investment Authority, Credit Suisse’s second-largest investor, holds a 6.8 per cent stake in the bank, but it hasn’t disclosed about its losses.
Credit Suisse had been facing a number of problems and was trying to overcome the multi-dollar losses, but failed to win back investors’ confidence.
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In December 2022, Credit Suisse raised $4 billion in funding from investors, including major Gulf banks and sovereign wealth funds like Saudi National Bank, the Qatar Investment Authority and the Saudi Olayan Group. Norway’s sovereign wealth fund, Norges Bank Investment Management, is also a major shareholder in the embattled bank.
Credit Suisse's top shareholders
1. Saudi National Bank: 9.9%
2. Qatar Holding LLC: 6.5%
3. Olayan Group: 4.93%
4. BlackRock Inc.: 4.07%
Source: Credit Suisse
After years of administration struggles, heavy losses and scandals, Credit Suisse’s recent share price plunge started with the collapse of Silicon Valley Bank and Signature Bank earlier this month.
It aggravated when the Saudi National Bank on Wednesday said it could not provide any more financial assistance. This led to a rout in banking stocks, which promoted governments to float rescue plans to keep banks functioning amid market volatility.
Last week, Saudi National Bank Chairman Ammar Al Khudairy asked if it would increase its stake in the troubled Swiss lender. In his reply, he said, “absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory.”
The comment triggered investor panic and sent Credit Suisse shares down 24 per cent during that session.
However, the statement was “misinterpreted”. The Saudi bank clarified that it said after October 2022 it had no plans to expand its holdings beyond the current 9.9 per cent.
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