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As research shows, there was another plan to save Credit Suisse from bankruptcy before it was taken over by UBS. As two independent sources confirm, the Saudi National Bank (SNB) wanted to significantly increase its almost ten percent stake. Overall, investors would pump five billion dollars into the bank.
One source says this will give the Saudis a roughly 40 percent stake and control Credit Suisse. Shortly after the CS sale, the “Wall Street Journal” reported on a group of Saudi investors offering an investment of this size for the first time.
But the urgently needed billions did not flow. The Swiss Financial Market Supervisory Authority (Finma) is said to have vetoed it. Why does it remain the secret of the organizer? A spokesperson declined to comment when asked. The law stipulates that the regulator must give approval if a major foreign shareholder wishes to own more than ten percent of a large Swiss bank.
Explanation for a weird interview?
As part of its capital increase last November, the Saudi National Bank made a large investment in Credit Suisse and owns almost a ten percent stake. Further increases would require Finma’s approval. When the situation worsened after the collapse of Silicon Valley Bank, the Saudi financial institution was ready to lend a helping hand to the large Swiss bank.
Credit Suisse’s then Chairman Axel Lehmann (64) went to a conference in the Gulf region that week, where he stressed that CS does not need any government assistance. It can be assumed that he talked to a Saudi delegation there about the possibility of injecting capital.
SNB is controlled by the Saudi ruling family. A request for the Public Investment Fund, the state-owned investment fund that controls the Saudi National Bank, went unanswered. Axel Lehmann could not be reached. The CS media office declined to comment.
In the desert situation, it was not well received that the Swiss financial authorities said no to the rescue plan. This may explain why SNB Chairman Ammar al-Khudairy (60) refused to raise further capital in frustratingly clear words in a Bloomberg interview. When asked whether the bank would be open to further liquidity injections if there was a greater need for additional liquidity, al-Khudairy replied, “The answer is: absolutely not, for many reasons other than the simplest and regulatory reason.” legal.”
Al-Khudairy’s strong words caused a jolt in the equity and credit markets. Shares of Credit Suisse fell 24 percent. Other bank stocks also came under pressure. Insurance premiums for default protection on CS bonds rose to new record highs. The day Al-Khudairy threw CS into the abyss, leaders of the federal government met with Colm Kelleher, 64, chairman of UBS’s board. Late on Wednesday evening, Finma and the Swiss National Bank sent a joint statement that they would provide liquidity to Credit Suisse “if needed”, which was again Thursday night.
Worst case for Saudis
The rest is history. Four days later, on Sunday, March 19, Credit Suisse was sold to UBS for CHF 3 billion. Part of the deal was the depreciation of $17 billion in AT1 bonds. What is explosive is that the Saudi plan will not trigger the so-called feasibility event. So private bonds that triggered a series of lawsuits would not be declared invalid.
For the Saudis, this was the worst case. The short commitment to Credit Suisse cost him more than a billion dollars. Instead of ten percent in Credit Suisse, they now own 0.5 percent in UBS. It seems it was the monarch Prince Mohammed bin Salman himself who originally advocated for the Saudi National Bank to establish a 10% stake in Credit Suisse in the first place.
It is, of course, quite possible that the Saudi rescue operation will come too late and fail. But it also shows that Credit Suisse’s bailout could be far more chaotic than previously thought. Creating clarity is now the job of the Parliamentary Commission of Inquiry.
*Journalist Beat Schmid writes about finances in Sunday’s Blick newspaper. Tippinpoint.ch is the publisher of the online media.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
