Credit Suisse has recovered quickly and is telling its clients to keep their trust in its services
Credit Suisse HQ in Zurich
Why Credit Suisse’s did shares fall? What the largest shareholder, the Saudi National Bank, says. Ammar Al Khudairy, chairman of the Saudi National Bank, Credit Suisse’s main investor, explained on Thursday, after the Swiss bank’s shares fell sharply on Wednesday, that the turbulence that sent the share price down was “unwarranted”. The Swiss bank Credit Suisse, whose main investors are the Arabs of the Saudi National Bank (SNB), held the headlines on Wednesday of the tensions in the international market, the height of the roller coaster of effects produced by the bankruptcy of the American Silicon Valley Bank. After 40 years in business, Silicon Valley Bank (SVB) collapsed within 48 hours as depositors, worried about the bank’s financial situation, rushed to the counters to withdraw their savings. The sudden and unexpected collapse of Silicon Valley Bank, which was shut down by US authorities on Friday, sent a wave of panic across the banking sector as markets questioned the consequences of the biggest US bank failure since the 2008 financial crisis. This was followed by the collapse of a second mid-sized American bank, and then on Wednesday, European stock markets fell sharply.
Concerns about the state of the banks crystallized on Wednesday around the Swiss at Credit Suisse, as the bank’s largest shareholder, the Saudi National Bank, ruled out any capital increase for the troubled institution. Shares quickly fell more than 24 percent, and after the bank revealed financial reports for 2022 and 2021, they fell as much as 30 percent, according to Reuters. Ammar Al Khudairy, the president of the Saudi National Bank, then declared that no further investments could be made for regulatory reasons, according to international media. A massive stock market crash followed, and to recover, Credit Suisse announced it was taking “immediate steps” to borrow up to 50 billion Swiss francs, or $53.68 billion, from the Swiss National Bank. Hours away, the chairman of Credit Suisse’s largest shareholder said the turmoil that sent the share price down was “unwarranted”. “If you look at how the entire banking sector went down, unfortunately, a lot of people were just looking for excuses,” Saudi National Bank President Ammar Al Khudairy told CNBC on Thursday. “It’s panic, a little panic. I think it is completely unjustified, whether it is for Credit Suisse or the entire market,” the Saudi official said. “We had a failure last week, but that is nowhere near what we saw in 2008,” This is just an isolated incident; regulators have shut down any possibility of expansion,” he said. Ammar Al Khudairi. Credit Suisse shares jumped more than 30 percent in open trade on Thursday after the bank said it would borrow up to 50 billion Swiss francs from the Swiss National Bank. The bank called the loan a “decisive action to strengthen its liquidity in a preventive way”. “This additional liquidity would support Credit Suisse’s core business and customers as Credit Suisse takes the necessary steps to create a simpler and more focused bank built around customer needs,” the bank said in a statement, according to CNN. In addition to the loan from the Central Bank, Credit Suisse also announced that it bought back billions of dollars of its own debt to manage its liabilities and interest expenses. Credit Suisse is 167 years old and has more than 50,000 employees. According to Credit Suisse’s 2022 report, Saudi National Bank owns the largest share of 395.5 million shares, which represents 9.88% of the total voting rights in the management of the Swiss lender, an acquisition that was announced by the group on December 10, 2022. The next significant investors are BlackRock Inc. with 4.07%, The Olayan Group with 4.93%, and Qatar Investment Authority with 5.03%. At the end of 2022, 72% of the shareholding structure consisted of institutional investors, one-third of whom were from North America, 18% were private investors, and 10% were other investors who could not be assigned to an industry. Bank shares are also held by investment funds, pension funds, insurance companies, and other banks. The Swiss bank’s share price has been falling in recent years as it has been hit by various scandals, according to an infographic published by Reuters on Thursday. According to Reuters, the bank’s market value has fallen by 90% from its pre-financial crisis peak in February 2007, from about $91 billion to about $8.66 billion. According to the most recent annual report, net income at the end of 2022 was 14.9 billion Swiss francs, down 34% from the end of the previous yea’sf 22.7 billion CHF. Total assets were then CHF 531.3 billion, down 30% from CHF 755.8 billion at the end of the previous year.
By Paul Bumman
