Absolutely not! Two words that cost the Saudis £1bn… after they were asked if they would increase their stake in Credit Suisse
When Saudi National Bank (SNB) Chairman Ammar Al Khudairy was asked about increasing his stake in Credit Suisse on Wednesday, he replied: “Absolutely not.”
They may turn out to be two of the costliest words ever spoken on television.
The comments, during a Bloomberg interview, sent shares into a tailspin and days later the struggling Swiss lender was taken over by rival UBS at a rock bottom price.
Stake: The Saudi National Bank bought a 9.9% stake in Credit Suisse, 167, in November last year at 3.82 Swiss francs a share – a total of £1.2bn
The SNB is now sitting on losses of almost £1bn. The Riyadh-based bank bought a 9.9% stake in 167-year-old Credit Suisse in November last year at 3.82 Swiss francs per share, a total of 1.2 billion pounds sterling.
Under the terms of the bailout deal with UBS, shareholders will only receive 0.76 Swiss francs per share, leaving the SNB and Al Khudairy to bear their losses.
They “shot themselves in the foot,” is how a UAE-based banker summed it up to CNBC.
“As the bank’s biggest shareholders, they had the most to lose if the bank failed, and that’s exactly what happened,” said the banker, who declined to be named.
Victoria Scholar, chief investment officer at Interactive Investor in London, added: “The Saudi bank’s chairman’s comments last week that his company would ‘absolutely not’ increase its support for Credit Suisse have proven very costly.
“They broke the camel’s back and mistimed a week when the banking sector was already under severe pressure following the collapse of Silicon Valley Bank.”
