The financial markets have been rocked by a series of banking collapses, with three U.S. institutions crumbling within a brief period, Now signs of trouble are also emerging in Europe. On Wednesday, March 15, Credit Suisse shares plummeted to a new all-time low after its largest shareholder, the Saudi National Bank (SNB), refused to offer additional financial relief. This news sent shockwaves through the markets, leaving investors uncertain about the future.
Saudi National Bank’s chairman says Credit Suisse does not need more money
Ammar Al Khudairy, Chairman of Saudi National Bank, described his bank’s investment as an opportunistic one and expressed his belief that the value realization of SNB investment will be demonstrated through a successful turnaround by Cisse Bank.
“We are pleased with the transformation plan they have put forward. It is a very strong bank.” Al Khudairy further commented on the matter during a conference in Riyadh, stating that Credit Suisse has all the necessary resources to make this transformation successful. I don’t think they will need extra money; if you look at their ratios, they’re fine. And they operate under a strong regulatory regime in Switzerland and other countries.”
Ammar Al Khudiary, Chairman of Saudi National Bank.
The bank executive further noted that the investment objective of the SNB is not bound by time and that it will exit when it has obtained the proper value from its shares. In October last year, SNB acquired a 9.9% stake in Credit Suisse’s capital fund-raising effort and committed to investing up to 1.5 billion Swiss francs ($1.5 billion). However, the stock of the Swiss lender has dropped to a new record low this week with a 21% dip on the daily trading figure at press time. CSGN was trading at 1.768 CHF at that time.
The Credit Default Swap (CDS) curve of the lender is currently inverted, suggesting financial distress. In comparison, Credit Suisse’s CDS is 18 times that of UBS and 9 times that of Deutsche Bank. However, this indicates a severe weakening in the lender’s position relative to other major players.