Saudi Bank’s Bid to Take Over Credit Suisse Falls Short

A top shareholder ruled out adding to its stake in troubled Credit Suisse, deepening the Swiss bank’s crisis amid market turmoil that has roiled markets. The chairman of Saudi Arabia’s largest lender said his institution could not raise its 9.9% stake because new rules would kick in if it went above 10%.

The move by Saudi National Bank, already the biggest Credit Suisse shareholder, heightened investor concerns over the bank’s financial health and reputation. It also deepened the strains on Credit Suisse’s top management, who have struggled to contain the damage caused by scandals and billion-dollar losses.

Credit Suisse has been battered by several scandals, including the collapse of investment fund Archegos Capital Management and supply chain finance firm Greensill Capital which cost the bank billions. It has also been forced to write down billions in so-called Additional Tier 1 bonds, which are wiped out or converted to equity if a bank’s capital buffers fall below certain levels.

UBS completed a swift emergency takeover of Credit Suisse last month, forging a massive Swiss banking and wealth management giant with a $1.6 trillion balance sheet and overseeing assets worth $5 trillion. That deal diluted Saudi National Bank’s shareholding in the Swiss bank to just 0.5% of UBS.

Swiss bank regulator FINMA blocked the Saudis from increasing their stake in Credit Suisse, a source close to the matter said. Under Swiss law, any foreign investor seeking to acquire a stake in a Swiss central bank above 10% must get approval from FINMA.

The reason for FINMA’s opposition to the increase was unclear. It is not unusual for a significant shareholder to seek to reduce its holding in a troubled bank, but it must still obtain permission from FINMA to do so.

In a separate development, the CEO of Credit Suisse’s private banking division resigned on Monday, the latest in a series of high-profile departures at the troubled lender. Philipp Aelberger, who had led the unit since its creation in 2022, cited “personal reasons.” His resignation is not expected to affect the planned sale of the Swiss bank’s private banking operations to UBS. The company will make a formal announcement on the sales process next week. It is expected to close in late June. The sale will be the biggest in the history of the Swiss banking industry.

Credit Suisse has been struggling for years to revive its business after the financial crisis, as investors pulled money and regulators looked into its risk-taking practices. The bank’s problems accelerated after global reporting outlets released the “Suisse secrets” investigation in 2022, showing it served clients linked to torture, drug trafficking, and other crimes for decades. It has been trying to rebuild its reputation by overhauling its risk and control frameworks. But several big clients have recently sold their shares and are considering exiting the bank. Clients pulled more than $100 billion of assets from the Swiss bank in the final three months of 2022, and outflows have continued this year despite a four billion-franc capital raise.

Violet Martinez

Violet Martinez is a marketing professional and freelance writer based in London. She has a Bachelor's degree in Marketing from the University of Westminster and has worked in the marketing industry for over seven years. Violet Martinez's writing has been published in various online publications, covering topics such as social media marketing, content marketing, and digital advertising. In her free time, Violet enjoys traveling, cooking, and practicing photography.

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