Signage for Credit Suisse Group AG outside a building, which houses the company’s branch, in Tokyo, Japan, on Monday, March 20, 2023. UBS Group AG agreed to buy Credit Suisse Group in a historic government-sponsored deal aimed at containing a crisis of confidence that began to spread throughout the global financial markets.
Kosuke Okahara Bloomberg Getty Images
Saudi National Bank has been nursing large losses in the wake of Credit Suisse failed after a deal for UBS to buy the embattled Swiss lender for $3.2 billion.
Saudi National Bank – Credit Suisse’s largest shareholder – confirmed to CNBC on Monday that it had suffered a loss of around 80% of its investment.
The Riyadh-based bank holds a 9.9% stake in Credit Suisse, having invested 1.4 billion Swiss francs ($1.5 billion) in the 167-year-old Swiss lender in November last year, at 3.82 Swiss francs per share.
Under the terms of the rescue deal, UBS paid Credit Suisse shareholders 0.76 Swiss francs per share.
The significant discount comes as regulators try to shore up the global banking system. The scramble to save the day followed a tumultuous few weeks that saw the collapse of Silicon Valley Bank and US-based bank First Republic, as well as major stock price falls in the international banking sector.
Shares in UBS, Switzerland’s biggest bank, were trading down 10.5% at 9:28 a.m. London time, while the European banking sector was about 4% lower. Credit Suisse is down 62%.
The head office of the Saudi National Bank (SNB) extends beyond the King Abdullah Financial District Conference Center in the King Abdullah Financial District (KAFD) in Riyadh, Saudi Arabia, Tuesday, December 6, 2022.
Bloomberg Bloomberg Getty Images
Despite the loss, the Saudi National Bank said its broader strategy remained unchanged. Shares of the lender were up 0.58% on Friday at 9:20 am London time.
“As of December 2022, the SNB’s investment in Credit Suisse will be less than 0.5% of the SNB’s total Assets, and c. 1.7% of the SNB’s investment portfolio,” the Saudi National Bank said in a statement.
He said there was “nil impact on profitability” from the “regulatory capital perspective.”
“The change in the value of the SNB’s investment in Credit Suisse has no impact on the SNB’s growth plan and guidance for 2023,” it added.