2023-03-17 20:02:56

Credit Suisse exploded, "there is plenty of m

On March 15th, global financial markets were dragged down by the crisis at Credit Suisse (hereinafter referred to as "Credit Suisse") and suffered a major earthquake. Credit Suisse's own stock price once plummeted by 30%, European and American bank stocks collectively plummeted, and the Dow Jones Index of the United States once fell by more than 600 points. At the same time, the prices of safe haven assets such as gold have soared.

In this financial storm, the Saudi National Bank (SNB), controlled by the Saudi government, has become the focus of media attention. As the largest shareholder of Credit Suisse, Saudi National Bank is extremely resolute and has stated that it will not lend a helping hand to inject capital into Credit Suisse. This statement has also greatly exacerbated the panic among global investors and made the financial industry jittery.

The century-old store needs cash to survive, while the largest shareholder with money in his hand stands idly by and "sees death without rescue." The game behind this is intriguing...

The largest shareholder spoke harshly:

Never save

According to public information, in 2022, Credit Suisse's total assets were 3.97 trillion yuan, and its total liabilities were 3.63 trillion yuan, including 1.74 trillion yuan in deposit size. During the restructuring process of Credit Suisse in 2022, SNB entered as a cornerstone investor, buying about 9.9% of Credit Suisse's shares to become its largest shareholder, and committed to investing 1.5 billion Swiss francs.

According to the official website of Credit Suisse, the sovereign wealth fund under the Qatar Investment Authority holds more than 5% of the equity, and the Saudi private company Olayan Group holds more than 4.9%, adding a strong Middle East flavor to the 167 year old Swiss banking giant.

Credit Suisse exploded, ↑ Credit Suisse was founded in 1856 and has significant influence in the global capital market. According to Visual China

Surprisingly, despite having such a significant interest relationship with Credit Suisse, SNB chose to "die or die" at a critical juncture when Credit Suisse was facing a liquidity crisis. When asked if SNB Chairman Kudelhi would inject capital and blood into Credit Suisse if necessary, he gave a brief and powerful answer: "Absolutely not!"

Credit Suisse is short of cash, and SNB "has plenty of money". At this time, the financial market was surprised to choose "to die or not to save".

According to Credit Suisse's annual report, there has been a significant increase in the speed of withdrawals since the fourth quarter of last year. Last year, more than 120 billion Swiss francs (approximately $130 billion) of cash assets flowed out of Credit Suisse, with the majority (110 billion Swiss francs) occurring in the fourth quarter.

If SNB increases its investment, it may help Credit Suisse offset some of its losses. According to data, this Riyadh based bank performed strongly in 2022, with a profit growth rate of over 45% last year. And the collapse of Credit Suisse's stock price will also have an impact on SNB's book asset value. According to US media reports, the current stock price level of Credit Suisse has been "halved" compared to the Saudi purchase price. Over the past year, Credit Suisse's stock price has fallen by about 73%.

The chairman of SNB spoke out the considerations behind it:

Regulatory and regulatory limitations

Kudri said that there are many reasons why the bank refused to continue assisting Credit Suisse, and the environmental factors are complex, but the most important reason is regulatory and regulatory restrictions.

Currently, SNB's shareholding in Credit Suisse is at the "extreme level" of 9.9%. Once the shareholding exceeds 10%, both domestic regulators in Saudi Arabia, as well as regulators in Switzerland and the European Union, will comprehensively upgrade their review level, and many new regulatory rules will be triggered.

"We are not inclined to enter a new regulatory dimension, with a glass ceiling limiting our shareholding ratio, and we do not intend to break through it." Kudri also said that he believed that Credit Suisse "does not require additional cash injections.".

"We are satisfied with the strategic planning and transformation plan proposed by Credit Suisse. This is a bank with very strong vitality. I don't think they need additional funds; if you look at their various financial indicators, and they operate under the strong regulatory systems of regulatory institutions in Switzerland and other countries and regions, there won't be much problem."

Kudri added that the Saudi National Bank's investment in Credit Suisse has no timetable and will exit after the appropriate value of its stock is obtained.

Calling itself "cabbage price" as a shareholder

I had high hopes for Credit Suisse

When SNB acquired Credit Suisse shares at the end of last year, Kudri once told American media with a smile, "The cost of holding shares is entirely the price of cabbage, which feels like shares picked up for nothing.".

Credit Suisse exploded,

↑ Credit Suisse's stock price plummeted

The "bottom" price that was originally thought to have dropped again and again in just a few months seems to have caused the Saudis to lose patience. SNB, originally a cornerstone investor, has now defined its role in Credit Suisse as a "opportunist" who stands idly by. In the words of the chairman of SNB, "They have their plans, and we have no seats on the (Credit Suisse) board."

A few months ago, the same chairman, Kudelhi, was still looking forward to close collaboration between the two sides to jointly develop the huge financial and wealth management market in the Gulf region. "If we can engage both sides more in the Saudi market, this will have a synergistic effect on both sides. Credit Suisse and Saudi Arabia will conduct more cooperation in Europe than in the past."

As the Saudi government transforms its huge oil company into a listed company, and the rise in oil prices has sparked interest in the region, foreign investors are investing funds in the Persian Gulf stock market, creating a prosperous scene. Saudi Arabia is the world's largest oil exporter and is expected to grow faster than any other major economy in the past two years. Saudi Arabia's inflation rate is currently among the lowest in the world.

"The size of the Saudi market is like a 700 pound gorilla," Kudri said. Saudi Arabia has a large demand for funds (such as building super large-scale infrastructure such as skyscrapers), which exceeds the borrowing and supply capacity of local banks. At the same time, there is a large group of super wealthy individuals in the Gulf region, and local financial institutions lack sufficient wealth management capabilities to serve these wealthy individuals. When SNB acquired shares, it expressed its optimism about Credit Suisse's rich experience in this field, hoping to enable veteran European bankers to show their skills in the Gulf region and explore new blue ocean markets.

Red Star News Reporter Fan Xu Intern Zheng Zhi

Editor: Guo Yu, Chief Editor: Feng Lingling