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Thursday, Dec 08, 2022

Saudi Arabia's SNB’s shares dip as it seeks to own 10% stake in Credit Suisse worth $1.5bn

Saudi Arabia's SNB’s shares dip as it seeks to own 10% stake in Credit Suisse worth $1.5bn

Saudi National Bank, known as SNB, is all set to invest up to $1.5 billion in Switzerland-based Credit Suisse, as the global investment bank eyes raising capital of $4 billion.
Following the announcement, the bank’s shares declined by 6.27 percent to reach SR59.80 ($15.9) at the end of Thursday.

According to a statement from Credit Suisse, SNB will use this amount to achieve a shareholding of 9.9 percent in the firm, subject to approval at the Extraordinary General Meeting on Nov. 23, 2022.

In a statement filed to Tadawul, SNB said that it intends to explore certain strategic partnerships with Credit Suisse in complementary geographies and businesses.

“This is a historic moment for Credit Suisse. We are radically restructuring the Investment Bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs,” said Ulrich Körner, CEO of Credit Suisse.

He added: “Our new integrated model, with our Wealth Management franchise, strong Swiss Bank and capabilities in Asset Management at its core, is designed to allow us to deliver a unique and compelling proposition for clients and colleagues while targeting organic growth and capital generation for shareholders.”

In another statement, Credit Suisse revealed that it incurred losses of up to $4 billion in the third quarter of 2022, badly missing the average estimate of 413 million francs in a consensus compiled by the embattled Swiss bank which also unveiled its new strategy.

According to the statement, Credit Suisse is aiming to separate its investment bank to create CS First Boston, focused on advisory and capital markets, and hopes to attract third-party capital.

Credit Suisse has been the symbol of Swiss reliability for several years, but the bank’s reputation was badly affected by a series of scandals, which includes an unprecedented prosecution at home for laundering money for a criminal gang, reported Reuters.

The statement further noted that it has entered into a framework and exclusivity agreement to transfer a significant portion of its Securitized Products Group to an investor group led by Apollo Global Management.

Under the terms of the proposed transaction, investment vehicles managed by affiliates of Apollo and PIMCO would acquire the majority of SPG’s assets from Credit Suisse.

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