March 22, 2023: Saudi National Bank is nursing significant losses in the wake of UBS’s forced takeover of Credit Suisse to $3.2 billion.
Saudi National Bank Credit Suisse’s significant shareholder confirmed to CNBC on Monday that it had reached a loss of around 80% on its investment.
The Riyadh-based bank holds a 9.9% stake in Credit Suisse, which had invested 1.4 billion Swiss francs in the 167-year-old Swiss lender in November last year, at 3.82 francs each share.
Under the terms of the return deal, UBS is paying Credit Suisse shareholders 0.76 francs for each share.
The significant discount arrives as regulators try to shore up the global banking system. The scramble for a rescue is following a tumultuous few weeks, which witnessed the collapse of U.S.-based Silicon Valley Bank’s shares of First Republic Bank tank and significant stock price downturns across the banking sector internationally.
Shares of UBS, Switzerland’s significant bank, traded down 10.5% at 9:28 a.m. London time, while Europe’s banking sector was nearly 4% lower. Credit Suisse decreased a whopping 62%.
The KAFD World Trade Center, Riyadh Bank skyscraper office building, Public Investment Fund (PIF) tower, and the Saudi National Bank (SNB) headquarters, left to right, beyond the King Abdullah Financial District Conference Center in the King Abdullah Financial District (KAFD) in Riyadh, Saudi Arabia, on Tuesday, December 6, 2022. The Saudi Arabian tourism ministry targets 12 million foreign tourists this year, with tourism on track to contribute regarding 4% of economic output, Tourism Minister Ahmed Al-Khateeb
Despite the loss, Saudi National Bank stated its broader strategy remains unchanged. Shares of the lender increased 0.58% on Monday at 9:30 a.m. London time.
“As of December 2022, SNB’s investment in Credit Suisse is constituting lesser 0.5% of SNB’s Assets total, and c. 1.7% of SNB’s investments portfolio,” Saudi National Bank stated.
It said there was “nil effect on profitability” from a “regulatory capital perspective.”
“Changes in the valuation of investment of in Credit Suisse have no impact on SNB’s development plans and looking forward from 2023 guidance,” it added.
The Qatar Investment Authority, Credit Suisse’s next-largest investor, holds a 6.8% stake in the bank and suffering a steep loss.
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