Saudi National Bank, Credit Suisse’s largest shareholder, has lost about $1 billion in taking over the ailing Swiss bank. However, the Saudi lender invested around 1.4 billion euros in Credit Suisse at the end of last year as a sign of confidence in the Swiss bank.
A series of scandals for years have plagued Credit Suisse. For example, the bank did business with investment fund Archegos and the finance company Greensill, which collapsed in 2021 due to risky behaviour. As a result, the bank suffered its most significant loss since the financial crisis of 2008 last year. The bank also suffered considerable reputational damage, as a result of which many customers decided to withdraw their money from Credit Suisse.
Credit Suisse’s share price, which had already plummeted due to the scandals, came under further pressure last week due to the problems in the US regional banking sector. A comment from the chairman of Saudi National Bank last week also caused panic. He said he had no intention of investing extra in the bank.
However, the chairman of Saudi National Bank explained that this was not possible due to applicable rules and that Credit Suisse had not asked for help, but the damage had already been done. After his comment, Credit Suisse shares plummeted about 25 percent in value. However, according to the chairman, the fall in price was “completely unfounded”.
However, the global banking sector has been under scrutiny since the collapse of US regional banks Silicon Valley Bank and Signature Bank. As a result, investors react nervously to any news about the sector.
Under pressure from the Swiss authorities, Credit Suisse was taken over on Sunday for about 3 billion euros by its larger rival, UBS. The purchase price will be paid entirely in UBS shares and is almost 60 percent below the market value that Credit Suisse still had at the close of Swiss stock exchange trading last Friday. The acquisition price is also 99 percent below Credit Suisse’s peak value in 2007.
Saudi National Bank’s 9.9 percent stake in Credit Suisse is now valued at about 304 million Swiss francs after the UBS bid, according to the Bloomberg news agency calculations. However, the Saudi lender said Monday that the fall in the value of its investment in Credit Suisse would not affect its growth plans and prospects for this year.