Credit Suisse sale has ‘no impact’ profits – SNB

Saudi National Bank, Credit Suisse’s largest shareholder, has stated that the Swiss lender’s buyout by UBS has “no impact” on the Saudi bank’s growth plans or profitability. The SNB invested SR5.5 billion ($1.4 billion) in Credit Suisse in November 2022, but this only represented 0.5% of the bank’s total assets and approximately 1.7% of its investment portfolio as of a month later. The announcement came after Swiss authorities orchestrated UBS’s takeover of Credit Suisse for almost $3.25 billion in an effort to avoid further market-shaking turmoil in the global banking system.

Credit Suisse, one of 30 globally systemically important banks, has been a concern for authorities due to the potential fallout if it were to fail. Shares of the bank and other financial institutions plunged after the failures of two US banks sparked concerns about other potentially shaky institutions in the global financial system. Credit Suisse’s plan to borrow up to 50 billion francs ($53.76 billion) failed to reassure investors and customers, leading to the regulators’ push for UBS to acquire its smaller rival.

In a statement to the Saudi stock exchange, SNB said that changes in the valuation of its investment in Credit Suisse would have no impact on its growth plans and forward-looking 2023 guidance. SNB also assured that the changes in valuation will have no impact on its capital adequacy ratio, which was estimated to have a 15 basis points impact from the Mark-to-Market decline in Credit Suisse as of December 2022. The potential impact to SNB’s Capital Adequacy Ratio from the recent announcement is around 35 basis points but would have zero impact on profitability. The bank’s assets surpass SR945 billion, and it continues to have healthy capitalisation and liquidity above the prudential thresholds.

Despite the announcement, the ongoing uncertainty surrounding the global financial system and the impact of COVID-19 on economies and businesses continues to cause concern among investors. As the situation develops, it remains to be seen what further measures will be taken to support the financial industry and stabilise markets.