Credit Suisse’s Saudi Backer Rules Out Raising Stake For Now
Saudi National Bank is set to become one of Credit Suisse’s biggest shareholders with a 9.9%.
(Bloomberg) -- Credit Suisse Group AG’s Saudi backer is bullish on its investment in the struggling Swiss lender, but ruled out pumping more money into the bank for now.
Saudi National Bank “likes” Credit Suisse’s new leadership and their resolve to execute on its turnaround plan, though any additional equity for the moment is “out of the question,” Chairman Ammar Al Khudairy said in an interview with Bloomberg TV.
“We’re optimistic that if they do deliver on the turnaround plan, this bank will yield some very interesting accretion on a standalone basis,” he said. “We like where we are at 9.9%. At this stage we’re not interested in moving from a tactical shareholder into a different category in terms of our relationship with Credit Suisse.”
Saudi National Bank is set to become one of Credit Suisse’s biggest shareholders with a 9.9% stake as part of a sweeping multi-billion-dollar overhaul. The potentially $1.5 billion deal marks the first major international acquisition for the Saudi lender, which is 37% owned by the kingdom’s sovereign wealth fund.
Serious Investor
The investment also sets in motion Crown Prince Mohammed Bin Salman’s plan to encourage Saudi Arabia’s largest firms to expand globally, raise the kingdom’s profile as a serious investor and diversify its economy.
Saudi National Bank, created through a $15 billion merger less than a year ago, will use the investment to expand its wealth management and investment banking businesses inside the kingdom and globally, and will look at how the two firms can develop joint initiatives in the kingdom, Al Khudairy said.
“If we look at it on a standalone basis and as an investment we sit on for 3 to 5 years, we believe there is excellent return potential from it,” he said. “Beyond that, if we are able to create some opportunities that are relevant to our market, that’s won the cake.”
Read more about SNB’s investment in Credit Suisse
The bank last week indicated it may invest in any future capital raising by Credit Suisse. The lender will finance the acquisition from its own cash balance, Al Khudairy said, and may look at other overseas opportunities.
“We certainly are open to any deals if they’re opportunistic and if they make economic sense to us, but if you think we’re going to go out and buy a European bank or something like that, that’s not on the cards right now,” he said.
(Updates with comments from seventh paragraph.)
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