The head of Saudi Arabia’s largest bank said on Wednesday that it will not inject more money into the struggling Credit Suisse.
“Absolutely not, for many reasons,” Saudi National Bank chairman Ammar Al Khudairy told Bloomberg.
Background: Saudi National Bank (SNB AlAhli) acquired a 9.8% stake in Credit Suisse last October for around $1.5 billion. Based in Zurich, Credit Suisse is one of the largest investment banks in the world. Saudi National Bank, for its part, is the largest commercial bank in the kingdom.
On Tuesday, the bank said that it found material weaknesses in its financial reporting over the past two years, according to multiple reports. On Wednesday, Credit Suisse’s shares fell more than 20% to a record low on NASDAQ as of 1 p.m. ET, according to market data.
Khudairy said that increasing their stake in the bank to above 10% would cause new rules to kick in from both Saudi and European regulators.
“We’re not inclined to get into a new regulatory regime,” he told Bloomberg.
BREAKING: "Absolutely" not another cent for Credit Suisse. That's what Saudi National Bank, the embattled lender's top shareholder, tells Bloomberg TV in an interview https://t.co/fVEEB8116Z pic.twitter.com/Fy4KdEbfNc— Bloomberg TV (@BloombergTV) March 15, 2023
Khudairy made similar remarks to Reuters, saying they cannot provide more financial help due to a “regulatory issue.”
Why it matters: Saudi National Bank may have been able to help Credit Suisse stave off some of its losses had it been inclined to invest more. The Riyadh-based bank had a strong year in 2022, reporting a more than 45% profit increase last year, according to a press release.
The drop in Credit Suisse's share value is bad news for the Saudi National Bank itself. The stock was worth around double what it traded at on Wednesday when the Saudi bank purchased it.
Know more: Credit Suisse’s struggles follow authorities in the United States closing Silicon Valley Bank on Friday and Signature Bank on Sunday. Many Israeli tech companies had money in Silicon Valley Bank. The US government ultimately said it would guarantee deposits at both banks.
Update: AFP reported later on Wednesday that Credit Suisse will borrow up to $53.7 billion from the Swiss central bank for support after its shares dropped.