Financiers from the Middle East now own every fifth Credit Suisse share, with the fresh billions from abroad helping to fund its restructuring. But there might be a high price to pay in alienating the home market, finews.asia finds.
Commentators who derided Credit Suisse as «Credit Saudi» when the Saudi National Bank (SNB) took a stake of just under 10 percent in the troubled Swiss institution, see themselves vindicated once again. Qatar's sovereign wealth fund QIA has increased its stake in the institution to just under 7 percent, it was made known today and also reported by finews.asia.
The combined shares of Credit Suisse owned by SNB, Saudi conglomerate Olayan and QIA, amounts to 20 percent of the ownership by entities from the Middle East.
A Quick Reckoning
The SNB and QIA are owned by the ruling families of Saudi Arabia and the Emirate of Qatar, respectively, and critics conclude that Switzerland's second-largest bank is embracing financing from what many see as unjust states. Credit Suisse takes in billions, yet asks few questions about the conduct of its major shareholders. That the bank's Chairman Axel Lehmann attended the World Cup in Qatar gave critics additional fodder.
But the Qatar/Saudi critique can only go so far. The bank leadership around Lehman and CEO Ulrich Koerner did the obvious thing by tapping existing good relations and securing billions for the urgent restructuring of the ailing bank. Former Credit Suisse board member Michael Klein who is taking the reins at the planned investment bank spinoff CS First Boston has deep ties to Riyadh that may prove extremely useful.
Petrodollar Spending Spree
Instant financing with petrodollars is not only the growing influence of foreign regimes at the bank. They are making themselves felt in the real estate market as well.
In the whirlwind days of October and November, Credit Suisse faced an outflow of domestic assets. To put it into perspective, the bank said it only amounted to 1 percent of assets. Nevertheless, that was nearly 84 billion francs in assets under management during that period that left the bank. Swiss employees reported frightened savers contacting the bank after reading commuter and tabloid newspapers.
Forgotten at Home?
Such developments add fuel to the fire, especially since the bank advisors are the representatives of the Credit Suisse brand to clients. Domestically, clients are not only annoyed by the seemingly never-ending scandals and bad news surrounding the Group, but they increasingly feel forgotten. To their consternation, important internal announcements often only arrive in English in the various regions of Switzerland Swiss.
Then there is the new bonus program which ties managers to the bank for years to come. It does not apply in all of the big bank's foreign markets, which also rankles.
Incurable Romantics
This is fatal in times of change. In the past, the solid Swiss business always paid the Group's dividends. Today, the Swiss bank is the anchor of Credit Suisse and the strategists' plan B should the turnaround launched by Koerner & Co. not work out.
The idea of a resurrection of the old «Escher Bank», referring to the Credit Suisse predecessor bank SKA founded by Alfred Escher, is still circulating among the Swiss business community. But anyone clinging to this vision is considered an incurable romantic. There are no Swiss companies or entrepreneurs among the bank's major shareholders. The latest acquisition by the Qataris seems to further cement the trend of alienation.
