As Credit Suisse’s largest shareholder, Saudi National Bank has lost over 80% of its investment. The weekend failure of Credit Suisse resulted in its acquisition by rival UBS Group AG, the country’s biggest banking business, for just over $3.25 billion, or 60% less than its share price.
At the Friday closing price of 1.86 Swiss francs, Credit Suisse had a market value of $8.7 billion. A 9.9% interest in the Swiss bank is held by the Saudi National Bank, which is headquartered in Riyadh. At a cost of 3.82 francs for each piece, it made an investment of $1.5 billion USD in November 2022.
All You Need to Know Regarding Credit Suisse and SNB!
According to the conditions of the contract, UBS will pay the Credit Suisse shareholders 0.76 francs for each share it buys for $3.25 billion. Saudi National Bank will thus lose $1.2 billion, or nearly 80% of its stake, which is a significant sum. From a “regulatory capital viewpoint,” Saudi National Bank said in an official statement that there was “zero impact on profitability,” according to a CNBC report.
The second-largest investor in Credit Suisse, the Qatar Investment Authority, has a 6.8% interest in the bank but hasn’t provided any financial details on their losses. With several issues and efforts to recover from significant losses, Credit Suisse was unable to restore investors’ faith. Major Gulf banks and sovereign wealth funds like the Saudi National Bank, the Qatar Investment Authority, and the Saudi Olayan Group were among the investors who contributed $4 billion to Credit Suisse’s capital round in December 2022.
Another significant shareholder in the troubled bank is Norges Bank Investment Management, the government wealth fund of Norway. The recent share price decline at Credit Suisse began with the failure of Silicon Valley Bank and Signature Bank earlier in the month, following years of management issues, significant losses, and scandals.
The Saudi National Bank’s announcement that it could no longer offer financial support on Wednesday only served to exacerbate the situation.
This resulted in a collapse in banking stock prices, which encouraged governments to announce rescue plans to maintain the viability of banks despite market turbulence. Ammar Al Khudairy, the chairman of the Saudi National Bank, enquired this week about whether it would raise its holding in the financially ailing Swiss firm.
He responded, “Absolutely not, and that’s for a variety of reasons beyond the most basic one, which is statutory and regulatory.” The remark caused shares of Credit Suisse to plunge 24% that session due to market panic. The statement was “misinterpreted,” nonetheless. The Saudi bank stated that it had said it had no plans to increase its shareholding over the existing 9.9% after October 2022.
