Swiss banks have wooed wealthy Saudi Arabian clients for decades. A wide-sweeping anti-corruption campaign by the young force behind the kingdom's throne puts Switzerland's banks into a dicey position.
The arrest of 11 Saudi billionaires last month is a growing risk for Swiss banks. Crown prince Mohammed bin Salman's unprecedented anti-corruption campaign is believed to be a grab at millions in assets to – dirty money, the millennial royal believes, which the billionaires hoovered up over decades.
Banks in Switzerland have also spent decades wooing wealthy Saudi Arabian clients, and ties are deep: UBS and Credit Suisse in particular are known as key private banks in the kingdom. The crown prince's crackdown is becoming an increasing burden for the Swiss firms.
Swiss Inquiries
Swiss banks have reportedly already asked their regulator, Finma, how they should handle the snafu. Now, they're going a step further, according to the «Financial Times» (behind paywall): several banks have lodged several dozen potentially suspicious Saudi Arabian transactions with MROS, Bern's central register for money-laundering offenses.
Swiss officials haven't interfered yet, although bin Salman has reportedly asked several western states for their help with his anti-corruption campaign. Of course, Switzerland is forbidden from handing over confidential client data to a foreign country without a request for legal assistance.
Cash Flowed Home
This has apparently already happened since the arrests last month: «We are processing information that was submitted,» Swiss attorney general Michael Lauber told the newspaper.
In fact, banks have already released initial cash payments for their Saudi clients to buy their freedom from the corruption charges, the «FT» reports. Neither UBS nor Credit Suisse commented on the report or their Saudi clients.
The Activist Factor
The Saudi crackdown is particularly treacherous for Credit Suisse, which faces calls to break itself up from an RBR Capital Advisors, an activist hedge fund. The newspaper had previously reported that Saudi Arabia's sovereign wealth fund could step in for long-time shareholder Qatar, which left the bank's board earlier this year and marginally trimmed its stake.
RBR is on the hunt for potent shareholders to support its case for Credit Suisse to be split, which the bank has rejected. The Zurich-based hedge fund was previously reported by the paper to have a sovereign wealth fund «waiting in the wings» to buy a stake.
