No more investment in Credit Suisse, says Saudi National Bank

Reuters/Arnd Wiegmann

• Shares in Swiss Bank continue to decline
• SNB has 10% stake in Credit Suisse
• Silicon Valley Bank collapsed earlier this week

Saudi National Bank has ruled out any further investment in Credit Suisse as the troubled Swiss bank shed a quarter of its value on Wednesday.

Saudi National Bank (SNB) chairman Ammar Al Khudairy said during an interview with Bloomberg TV that investing any more would then increase its current 10 percent stake in the the Swiss lender, which would lead to regulatory issues.

“If we go above 10 percent, all new rules kick in, whether it be by our regulator or the Swiss regulator or the European regulator,” he said.

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“We’re not inclined to get into a new regulatory regime,” he continued. “I can cite five or six other reasons, but one reason is there is a glass ceiling and we’re not going to entertain going beyond it.”

SNB, which is 37 percent owned by Saudi Arabia’s sovereign wealth fund, became an anchor investor in Credit Suisse’s $4.3 billion capital raise, which began in October to fund the bank’s revamp and restructuring. 

The stake, initially worth 1.4 billion Swiss francs ($1.53 billion), has since lost more than 500 million francs, according to the Bloomberg report.

The second biggest bank in Switzerland is looking to recover from a string of scandals that have undermined the confidence of investors and clients.

Customer outflows in the fourth quarter of last year rose to more than 110 billion Swiss francs.

Earlier this week Credit Suisse published its annual report for 2022 where it revealed “material weaknesses” had been identified in controls over financial reporting and it had not yet stopped customer outflows.

Shares fell below the 2-Swiss franc mark for the first time in Zurich on Wednesday as they headed for a seventh straight daily decline. 

The cost of insuring the company’s bonds against default also increased.

Five-year credit default swaps on Credit Suisse debt widened to 574 basis points from 549 bps at last close, a new record high, according to data from S&P Global Market Intelligence. 

The Qatar Investment Authority (QIA), the Gulf state’s sovereign wealth fund, increased its stake in Credit Suisse to just under 7 percent in January, becoming the Swiss bank’s second largest shareholder behind SNB.

QIA bought 139.03 million shares in the Swiss lender, bringing its ownership to 6.87 percent.

Saudi Arabian conglomerate Olayan Group owns a stake of about 3 percent, Eikon data shows.

Speaking at the Financial Sector Conference in Saudi Arabia on Wedensday, Credit Suisse Group AG’s chairman Axel Lehmann said it would not be accurate to compare its problems with the recent collapse of Silicon Valley Bank (SVB), particularly because the banks are regulated differently.

SVB Financial Group on Friday became the largest bank to fail since the 2008 financial crisis, roiling markets and leaving billions of dollars belonging to companies and individuals stranded.