When Saudi National Bank (SNB) chairman Ammar Al Khudairy was asked if it would increase its stake in Credit Suisse on Wednesday last week, he replied: ‘Absolutely not’.
They may prove to be two of the most costly words ever uttered on television.
The comments, during a Bloomberg interview, sent shares into freefall and days later the troubled Swiss lender was taken over by its arch-rival UBS at a knockdown price.
Stake: The Saudi National 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 £1.2bn
SNB is now sitting on losses of almost £1bn. The Riyadh-based bank bought a 9.9 per cent stake in 167-year-old Credit Suisse in November last year at 3.82 Swiss francs per share – a total of £1.2billion.
Under the terms of the rescue deal with UBS, shareholders will get just 0.76 Swiss francs per share, leaving SNB and Al Khudairy nursing their losses.
They ‘shot themselves in the foot’ is how one UAE-based banker summed it up to CNBC.
‘As the largest shareholders in the bank, they had the most to lose if the bank goes under, and this is exactly what happened,’ said the banker, who did not want to be named.
Victoria Scholar, head of investment at Interactive Investor in London, added: ‘The Saudi bank chairman’s comments last week that his company would “absolutely not” increase its support for Credit Suisse has proven to be very costly.
‘They were the last straw and badly timed on a week when the banking sector was already under heavy strain in the aftermath of Silicon Valley Bank’s collapse.’
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