Saudi National Bank loses over $1 billion on Credit Suisse investment
Signage for Credit Suisse Group AG outside a building, which houses the company’s branch, in Tokyo, Japan, Monday, March 20, 2023. UBS Group AG has agreed to buy Credit Suisse Group as part of a a landmark government-brokered agreement aimed at containing a crisis of confidence that had begun to ripple through global financial markets.
Kosuke Okahara | Bloomberg | Getty Images
The Saudi National Bank suffers significant losses as a result of of Credit Suisse failed after a deal was struck for UBS to buy the troubled Swiss lender for $3.2 billion.
The Saudi National Bank – the largest shareholder in Credit Suisse – confirmed to CNBC on Monday that it suffered a loss of around 80% on its investment.
The Riyadh-based bank has a roughly 10% stake in Credit Suisse, having invested 1.4 billion Swiss francs ($1.5 billion) in the Swiss lender in November last year at 3, 82 Swiss francs per share.
Under the bailout agreement, UBS is paying Credit Suisse shareholders 0.76 Swiss francs per share.
The steep discount comes as regulators attempt to shore up the global banking system. The bailout rush follows a tumultuous few weeks that saw the collapse of US-based Silicon Valley Bank and First Republic Bank, as well as major stock price declines in the banking sector in the US. international scale.
Shares of UBS, Switzerland’s largest bank, were trading down 10.5% at 9.28am London time, while the European banking sector fell around 4%. Credit Suisse fell 60%
The headquarters of the Saudi National Bank (SNB) outside the King Abdullah Financial District Conference Center in the King Abdullah Financial District (KAFD) in Riyadh, Saudi Arabia, Tuesday, Dec. 6, 2022.
Bloomberg | Bloomberg | Getty Images
Despite the loss, the Saudi National Bank says its broader strategy remains unchanged. Shares in the lender were up 0.58% on Monday at 9:20 a.m. London time.
“As of December 2022, the SNB’s investment in Credit Suisse represented less than 0.5% of the SNB’s total assets and approximately 1.7% of the SNB’s investment portfolio,” the National Bank said. Saudi Arabia in a statement.
He said there was “no impact on profitability” from a “regulatory capital perspective”.
“Changes in the valuation of the SNB’s investment in Credit Suisse have no impact on the SNB’s growth plans and its forecast for 2023,” he added.