Saudi National Bank says its investment in Credit Suisse will not affect its growth plans or profits
Saudi National Bank, the biggest shareholder of Credit Suisse, has stated that the acquisition of the troubled Swiss lender by UBS will not affect its growth plans or profitability.
The Saudi National Bank invested SR5.5 billion ($1.4 billion) in Credit Suisse in November 2022, but after a month it only accounted for 0.5 percent of the bank’s total assets and roughly 1.7 percent of its investment portfolio, according to the SNB.
Banking giant UBS is buying Credit Suisse for almost $3.25 billion, in a deal orchestrated by regulators in an effort to avoid further market-shaking turmoil in the global banking system.
Swiss authorities pushed for UBS to take over its smaller rival after a plan for Credit Suisse to borrow up to 50 billion francs ($53.76 billion) failed to reassure investors and the bank’s customers.
In a statement to the Saudi stock exchange, SNB said: “Changes in the valuation of SNB’s investment in Credit Suisse have no impact on SNB’s growth plans and forward-looking 2023 guidance.”
Shares of Credit Suisse and other banks plunged after the failure of two banks in the US sparked concerns about other potentially shaky institutions in the global financial system.
Credit Suisse is among the 30 financial institutions known as globally systemically important banks, and authorities are worried about the fallout if it were to fail.
As of December 2022, the impact on SNB’s Capital Adequacy Ratio from the Mark-to-Market decline in Credit Suisse was an estimated 15 basis points with zero impact with regards to profitability.
However, with the new announcement, the potential impact to SNB’s Capital Adequacy Ratio is around 35 basis points also with zero impact when it comes to profitability.
That said, SNB also assured that any changes in the valuation of its investments in Credit Suisse will have no impact on SNB’s 2023 guidance nor its growth plans in the future.
With assets surpassing SR945 billion, SNB continues to have healthy capitalization and liquidity that remains above the prudential thresholds.