Credit Suisse, already under severe strain, now has to contend with a major shareholder who, to his detriment, clearly does not care enough about his investment.
In hindsight, it would probably have been better if Ammar Al Khudairy, the chairman of the Saudi National Bank (SNB), had kept mum and smiled at a conference in Riyadh.
His statements as the largest shareholder of Credit Suisse immensely unsettled investors. The fact that the Saudi bank does not want to inject any more capital into the major Swiss bank was severely punished on the stock market and sent Credit Suisse shares on yet another steep downward slide.
A Purely Financial Investment
Al Khudairy's statements are not new, however. As early as November, the SNB Chairman made it clear its stake in Credit Suisse was a purely financial investment and was not seeking further influence on the bank, by increasing the stake, and a seat on the board of directors was not being sought.
That the SNB would remain a tactical shareholder was also obvious for another reason. Observers insinuated the bank's purely financial investment was not least concerned with its social-economic standing in Europe.
Repeating the Familiar
In December, Al Khudairy doubled down in a «Financial Times» (behind paywall) interview saying the investment was barely worth a press release and a larger investment «would have stretched the management’s operational capabilities and would have diverted focus from their bread and butter — which is the Saudi market.»
He said the Saudi bank wants to hold the stake in Credit Suisse for a few years, perhaps longer, depending on market conditions.
Apart from that, he said, more than 95 percent of the SNB's focus was on further expanding its dominant position in Saudi Arabia. This marked out the bank's priorities and intentions sufficiently.
Rising Nervousness
Why didn't investors react to the rehash of these well-known statements on Wednesday with the same degree of calmness as a few weeks earlier? The situation has changed. The US banking crisis is particularly hard on the already struggling CS at a delicate moment.
In this fragile environment, Al Khudairy's praise that the bank is making faster-than-expected progress in its restructuring can be reinterpreted as a mere sedative.
Sink or Swim Together
Assurances about competent management and a feasible reorganization of Credit Suisse can also be quickly reinterpreted as the opposite of what is meant. They are interpreted as an admission the bank's solidity and creditworthiness are indeed under attack, precisely because they have to be made an issue.
So what was a clear commitment to the bank weeks ago has now taken on a very different flavor. Credit Suisse's largest shareholder should have been aware of this. As a spokesman for the SNB, Al Khudairy should have recognized a mere repetition of earlier statements, even if a clumsy restatement, is pouring gasoline on the fire of market nervousness.
The SNB's communication behavior is a cautionary tale. Even if you want to remain merely a financial investment due to regulatory, statutory, or other reasons, you must never give the impression of only half-heartedly holding on to an investment. As a team, you win or lose together.
