Credit Suisse? Absolutely not! Two words that cost Saudis £1bn
Absolutely not! Two words that cost Saudis £1bn…after being asked if they wanted to increase their stake in Credit Suisse
When asked last Wednesday whether it would increase its stake in Credit Suisse, the chairman of the Saudi National Bank (SNB), Ammar Al Khudairy, replied: ‘Absolutely not’.
They may turn out to be two of the most expensive words ever uttered on television.
The comments, during an interview with Bloomberg, sent stocks into freefall and days later, the troubled Swiss lender was acquired by its arch-rival UBS at a low price.
Inset: The Saudi National Bank bought a 9.9% stake in 167-year-old Credit Suisse last November for CHF 3.82 per share – a total of £1.2 billion
SNB is now sitting at a loss of nearly £1bn. The Riyadh-based bank bought a 9.9 percent stake in 167-year-old Credit Suisse for CHF 3.82 per share — a total of £1.2 billion — in November last year.
Under the terms of the bailout deal with UBS, shareholders will get just 0.76 Swiss francs per share, which will allow SNB and Al Khudairy to bear their losses.
They “shot themselves in the foot,” one UAE-based banker summed it up to CNBC.
“As the bank’s largest shareholders, they had the most to lose if the bank went bankrupt, and that’s exactly what happened,” said the banker, who declined to be named.
Victoria Scholar, head of investment at Interactive Investor in London, added: “The comments made by the Saudi bank chairman last week that his company would “absolutely not” increase its support for Credit Suisse has proved costly.
“They were the last straw and ill-timed on a week in which the banking sector was already under severe strain in the wake of the collapse of Silicon Valley Bank.”