In 2022, the Saudi National Bank took a 9.9 percent equity stake in Credit Suisse through an «opportunistic» investment. The Swiss lender's forced takeover by UBS did not impede the Saudi bank's profit growth.
Saudi National Bank (SNB) increased its first-quarter profit by 12 percent from the same period a year ago to the equivalent of $1.34 billion. Saudi Arabia's largest bank, owned by its ruling family, benefited from higher fees and gains on investments, according to «Reuters».
The profit came despite a 70 percent drop in the value of its Credit Suisse holdings to about $350 million.
No Earnings Impact
The Riyadh-based bank invested $1.5 billion when it took the 9.9 percent stake in Credit Suisse, a position now worth $347 million. The SNB already said the loss would not affect its profitability.
Following the forced takeover of Credit Suisse by UBS on March 19, the SNB will hold a 0.5 percent stake in UBS following the conversion of its Credit Suisse shares into those of UBS.
Sparking a Bank Run
The loss of its Credit Suisse position was largely due to its chairman Ammar Al Khudairy who on March 15, said the SNB would not expand its stake beyond the nearly ten percent it already owned. While that was not a new position for the SNB, the remarks triggered a massive selloff in Credit Suisse stocks.
At the time Al Khudairy was making positive comments on the restructuring of Credit Suisse and that it would not need a further infusion of capital. Moreover, «We cannot because we would go above ten percent. It’s a regulatory issue,» he said. But with financial markets jittery over the failure of Silicon Valley Bank and fearing a wider banking crisis, his comments sent Credit Suisse shares plunging.
