Credit Suisse is bringing Saudi National Bank on board as one of its largest shareholders to increase capital. At the «SNB», Saudi Crown Prince Mohammed bin Salman is pulling the strings in the background. After Khashoggi's murder, he was, at least for a while, an international pariah.
In their need for capital, Credit Suisse leadership has indirectly come into contact with one of the world's most active sovereign wealth funds. The Saudi National Bank (SNB) is just one of the vehicles with which the petro state intends not only to diversify its economy but also to expand its international influence.
According to Credit Suisse's plans, the SNB will inject 1.5 billion Swiss francs ($1.51 billion) for a 9.9 percent stake in its balance sheet. This is the bulk of the 1.85 billion francs earmarked for qualified investors. In total, the capital increase is expected to raise gross proceeds of around 4 billion francs.
So far, the largest shareholders of the beleaguered Swiss bank are Harris Associates with a 10.1 percent stake, the Qatar Investment Authority with 5.03 percent, and Blackrock, also holding around 5 percent. Whether the balance of power will change with the capital increase depends on whether the existing major shareholders follow suit.
Strategic Participation
Entities with direct links to the repressive, patriarchal Saudi royal house, which rules with absolute power, gain a weighty influence at Credit Suisse. In its statement to the Saudi Stock Exchange, the SNB writes that it is also considering a strategic partnership following the successful restructuring of Credit Suisse. The investment is part of the strategy to establish an independent investment bank, it said.
The SNB stressed that it could also participate in future capital measures of Credit Suisse to support the establishment of an independent investment bank and expand SNB's asset management, wealth management, and investment banking operations in the Kingdom, the statement said.
11 Million Customers
The largest Saudi bank, with around 11 million customers, emerged last year from the merger of the National Commercial Bank and the Samba Financial Group.
In turn, the largest shareholder of the SNB is the Saudi Arabian sovereign wealth fund «Public Investment Fund» with a stake of around 37 percent. The royal family, effectively led by Crown Prince Mohammed bin Salman, has big plans for it. The PIF is one of the world's largest sovereign wealth funds, with total assets estimated at $320 billion, and plays a central role in the «Vision 2030» development plan backed by bin Salman. The crown prince, who the CIA says likely ordered the murder of journalist Jamal Khashoggi in October 2018, is also chairman of the fund.
The Saudi PIF was launched back in 1971. Its mission was to invest the oil state's money and finance development projects in the country. In recent years, however, the direction has shifted. Part of the crown prince's dream is now to build the PIF into the world's largest sovereign wealth fund.
Vision 2030
The Saudi royal family is keenly aware the age of fossil fuels must eventually come to an end. To free the country's economy from its dependence on oil revenues, various diversification initiatives have been launched.
For example, investments in a tourist mega-project on the Red Sea or in the high-tech mega-city of Neom are being made through the PIF. The fund not only finances projects in the country itself, but also holds shares in companies like Tesla, Uber, and Softbank, along with infrastructure projects in the US. The northern English soccer club Newcastle United is among the investments in the PIF portfolio.
Part of Vision 2030 is also to build the kingdom into an important international hub for the financial industry. According to earlier media reports, the SNB has been pursuing plans to acquire stakes in European and American financial institutions for some time. In addition to Credit Suisse, Julius Baer, Standard Chartered and the Asian DBS Group have also been mentioned as possible targets.
