After investing up to $1.5 billion in the Swiss bank to take a 9.9% stake, Saudi National Bank (SNB) said it has no plans to join the Credit Suisse board of directors but is “open-minded” about doing so if circumstances change.
According to a press release from the Saudi bank, the deal would aid SNB in forging a “strong strategic relationship” to provide products and services that meet international standards to better serve its customers in Saudi Arabia and the neighboring countries.
SNB made it clear that this investment is a chance to strengthen its expertise in wealth management, asset management, and investment.
An SNB spokesperson stated, “We believe the cooperation with a leading global asset manager in both production and distribution of different products will enhance our presence in the institutional asset management space,” adding that its Shariah-based skill set will complement those of Credit Suisse and can mutually benefit from each other.
The Saudi bank added that it maintains “highly disciplined” control over its investment portfolio and has no intention of increasing its 9.9% holding in Credit Suisse.
“We are not committed to any future capital raising by Credit Suisse. Any future investment will be based on the financial and strategic merits of such investment, considering the impact on capital returns and shareholder value. We will review the execution of the strategy articulated by CS with their Q3 2022 results and decide on any future steps at the appropriate time,” the SNB spokesperson added.
While adding that there might be some short-term execution concerns, SNB stated that the investment in Credit Suisse would be accretive over the next few years. The bank had purchased ordinary shares without receiving any new rights or liabilities.
SNB’s holding in Credit Suisse will represent 2.2% of SNB’s proforma investment book, 3.5% of total shareholders’ equity, and 0.6% of all consolidated assets, according to the SNB spokesperson.
Given SNB’s strong capital position, the deal is anticipated to have a little overall impact on capital, with 20–40 bps over the next five years, according to the press release. SNB will also maintain a sizable buffer over statutory capital requirements.
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