PARIS, France - Saudi National Bank (SNB), the kingdom's biggest bank by assets, has made a strategic investment in Credit Suisse last year, acquiring a 9.88% stake in this Swiss lender for 5.5 billion riyals ($1.5 billion). SNB, which is majority government-owned said the carrying value of its investment was 1.3 billion riyals ($346.63 million) at March 31, reflecting the market volatility and the challenges faced by Credit Suisse.
Credit Suisse, which has been hit by the collapse of Archegos Capital Management and Greensil Capital, has agreed to merge with rival UBS, creating a banking powerhouse with a combined market value of about $100 billion. The merger, which was announced in April and is expected to close by the end of the year, will result in SNB's shareholding in Credit Suisse converting into a shareholding in UBS of approximately 0.5%.
This means that SNB will gain access to a larger and more diversified banking group, with a stronger presence in global wealth management and investment banking. SNB's former chairman said in November that the investment in Credit Suisse was tactical rather than strategic and that the bank would hold its stake for at least two years. He also said that SNB did not seek a seat on the Credit Suisse board or plan to raise its stake above 9.9%.
However, given the attractive valuation and the potential synergies of the merger, SNB may have an opportunity to increase its stake in UBS in the future. The merger of the two Swiss bank will create significant benefits and opportunities, such as regulatory approval, cultural alignment, cost-saving measure and enhanced profitability.
SNB's investment in Credit Suisse was seen as a smart move to diversify its portfolio and tap into the global wealth management market.
Comments