Saudi National Bank chair resigns after bank loses $1.2bn in Credit Suisse investment
Chair of Saudi National Bank (SNB) Ammar Al Khudairy stepped down today after the bank chalked up a $1.2bn loss on its investment in Credit Suisse.
SNB said in a statement that Al Khudairy had resigned for “personal reasons” and the current chief executive, Saeed Mohammed Al Ghamdi, will takeover as chair of the lender.
The Saudi National Bank became Credit Suisse’s largest shareholder in October last year after acquiring a 9.9 per cent stake for $1.5bn.
In an interview with CNBC earlier this month, however, Al Khudairy said the bank would “absolutely not” provide any more capital to Credit Suisse to take its stake above 10 per cent.
Following the interview, investors in the bank took fright, fearing that it might run out of cash, leading to a 30 per cent fall in the bank’s share price on the day.
By the end of the week Credit Suisse’s 167 year history as an independent entity came to an abrupt end when it was acquired by UBS for $3bn.
As a result, SNB faced a $1.2bn loss on its investment, although the bank has said this loss would not affect its investment plans. The investment represented just 2.2 per cent of its total investment portfolio.
Bloomberg Intelligence’s Edmond Christou said “SNB may get about CHF296m against its initial investment of CHF1.4bn. We calculate that this equates to a 50-basis point hit to the bank’s 16 per cent CET1, wiping out a quarter’s capital generation but with no impact on P&L.”
In a regulatory statement released last Tuesday following Credit Suisse’s acquisition, the bank said the loss had not changed its overall strategy.
“(SNB) remains focused on its core strategy of growth in Saudi Arabia, which is among the fastest growing countries within the G20,” it said.
Financial institutions from the Middle East have been taking a more prominent role in global banks recently as sky-high energy prices following the invasion of Ukraine has boosted the region. Its major banks are often backed by national sovereign wealth funds, making them a tool for political ambition.
Qatar Investment Authority holds a more than five per cent stake in Barclays, making it one of the bank’s largest shareholders. First Abu Dhabi Bank, supported by the Abu Dhabi’s sovereign wealth fund, has also been considering an offer for emerging markets focused lender Standard Chartered.
SNB’s biggest shareholder is the Saudi Public Investment Fund, which is controlled by Crown Prince Mohammad bin Salman.
While Middle Eastern involvement in European banks is unlikely to come to an end, investors may think twice following the Credit Suisse debacle.