The new Credit Suisse: “Solid as the mountains of Switzerland”, the country’s second largest financial institution, this is how it should be in the future global banking environment. There is pride in Axel Lehmann’s (63) voice as CS President announces the bank’s radical restructuring to the media on Thursday. However, these rocks are increasingly being built on desert sand.
CS needs a lot of new capital to fund the recovery plan. A significant portion of it is said to come from Saudi Arabia. Because for the announced four billion Swiss francs capital increase, it will come solely from the Saudi National Bank – a financial institution controlled by the Saudi royal family that could own almost ten percent of Credit Suisse in the future.
The fifth will soon belong to the sheikhs
This will further increase the Saudi influence in CS. A consortium from Saudi Arabia is already among the five largest shareholders: Olayan Group owns almost five percent of the shares in CS. Although the Olayan financing instrument is headquartered in Vaduz (FL), it was established in Saudi Arabia and is actually managed from there. Arab shareholders, along with Qatar’s sovereign wealth fund, will soon own a fifth of the major Swiss bank. Credit Suisse is on its way to becoming a Credit Sheikh!
Almost no company likes to be associated with Saudi Crown Prince and Prime Minister Mohammed bin Salman (37). He and his father, King Salman ibn Abd al-Aziz (86), are regularly criticized by Amnesty International for human rights abuses. On the other hand, your petrodollars are very welcome in many companies. Especially at Credit Suisse.
journalist murder
The list of allegations against the Saudi state is long: detention without charge or trial, torture, suppression of freedom of expression and religion, and arbitrary executions are just a few of them. In 2018, journalist Jamal Khashoggi († 59), critical of the government, disappeared from the Saudi Arabian consulate in Istanbul. A murder that puts the crown prince in a very bad situation.
The image is one thing, the Saudis’ plans are something else entirely: The Saudi National Bank writes that it sees joining CS as a strategic partnership – with the aim of expanding its skills in the banking business. Then to provide this information to their customers. CS brings the competition in-house. Ironically, in an area with many super-rich.
When Blick asked why CS had to rely on Saudi money, Chairman Lehmann gave a vague answer: “We have a large investor base. Now added to this is the support of the Saudi National Bank. Thus, we are further expanding our shareholder base.”
Splitting the investment bank
Not only the sheikh’s entry, but also the rescue plan was quite frowned upon. CS bosses have not overlooked the big words when it comes to new strategy. “This is a historic moment for Credit Suisse,” said CS CEO Ulrich Körner (60). “We are fundamentally restructuring the investment bank to create a bank that is simpler, more stable and more focused on our customers’ needs.” Körner said that at the center of the transformed CS is a strong Swiss bank.
The core of the recovery plan is the triple division of the investment bank. The old CS First Boston brand was revived and partially sold to investors. Critical parts are moved to a processing unit that will continue to suffer losses for years to come. And some of the work will have to serve wealth management in the future.
Employees have to go, dividends remain
However, CS employees in Switzerland must also contribute to the incremental savings program of 2.5 billion francs. 2000 people will be laid off in Germany, one out of every eight jobs will be lost. This worries the bank staff union. “Here we take Mr Körner’s word. If that’s the essence of the reorganization, then you need to strengthen Switzerland in location, and there can’t be such a massive job cut here in Switzerland, »says Association President Michael von Felten (62) Banking Staff View TV. In total, CS will cut 9,000 jobs worldwide by 2025.
The bank remains uncertain where future earnings will come from to stop its nearly endless quarterly streak of losses. This should be of interest to shareholders when, by November 23 at the latest, they are compelled to cancel the capital increase at an extraordinary general meeting.
Another aspect should make the Saudi entry into the second-largest Swiss bank even sweeter: Credit Suisse reliably pays dividends even in the biggest crisis. That was the case last year, despite billions being lost, and it shouldn’t change this year.