UBS sealed a deal for Credit Suisse for $3.2 billion over the weekend. That’s 60% less than what the bank was worth when markets closed on Friday (Mar. 17). With a fallout of that size, it’s no surprise that the rescue created many losers—among them, Credit Suisse’s largest shareholders.
Middle East-based Saudi National Bank, Qatar Holding, and the Olayan Group owned a combined 20% of Credit Suisse. Saudi National Bank recorded the largest lost, just about four months after becoming the Swiss bank’s largest shareholder. Saudi National Bank said it paid 3.82 Swiss francs ($4.12) a share in November, an overall $1.5 billion investment, for a 9.88% stake of the bank. UBS is now paying 0.76 francs ($0.82) a share, meaning Saudi Arabia’s largest commercial bank lost about 80% of its investment, or $1.2 billion.
Other major investors include Qatar Holding LLC, which boosted its shareholding to 6.87% in January. Qatar’s sovereign wealth fund began investing in Credit Suisse around the time of the 2008 financial crisis. In January 2021 it made strong returns on a multi-billion bet it made on distressed debt and highly rated bonds during the covid-19 pandemic. Qatar Holding has not publicly commented on the impact of UBS’s takeover of Credit Suisse, and neither has the Olayan Group, a Liechtenstein-based investment company founded by the late Saudi businessman Suliman Saleh Olayan.
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It is unclear if major backers were consulted before the UBS deal, but due to the Swiss Federal Council issuing an emergency ordinance, shareholder approval is not needed to move forward with the takeover, which is expected to be finalized by the end of 2023.
BlackRock, the bank’s fourth-largest shareholder, had declared late last week it had no interest in bidding for Credit Suisse. The investment company’s CEO Larry Fink warned that more banking troubles may lie ahead on both sides of the Atlantic, and that his company does not see central banks coming to the rescue with rate cuts.
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As more financial cracks from rapid rate hikes emerge, BlackRock is utilizing other strategies such as underweight equities, downgrading credit, and preferring short-term government bonds for income.
Shares in Saudi National Bank hit two-year low
Saudi Arabia’s stock market has seen mixed results. Stock in Saudi National Bank has been trending down since August 2022.
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One more thing: The one who got away
Earlier this month, Harris Associates, once Credit Suisse’s largest shareholder, announced it no longer held any stock in the Swiss bank, citing concerns about “the future of the franchise.” The Chicago-based activist investor began selling in October, after Credit Suisse raised $4.3 billion in a Saudi-led funding.
The acquisition was an all-stock deal, with Credit Suisse shareholders receiving 1 UBS share per 22.48 Credit Suisse shares, equivalent to CHF 0.76 per share.
CHF 16b of Credit Suisse Additional Tier 1 bonds will be wiped after merger with UBS. Tier 2 and Senior bondholders are safe for now from any potential write-down.
Under the terms of the merger agreement all shareholders of Credit Suisse will receive 1 share in UBS for 22.48 shares in Credit Suisse. Until consummation of the merger, Credit Suisse will continue to conduct its business in the ordinary course and implement its restructuring measures in collaboration with UBS.
Wealthy clients and retail depositors pulled billions from Credit Suisse last month after its anchor Saudi shareholder said that it would not invest more in the company.
On 15 March 2023, Credit Suisse' share price dropped nearly 25 percent after Saudi National Bank, its largest investor, said it could not provide more financial assistance.
Switzerland faced a full-scale bank run if Credit Suisse went bankrupt, Swiss regulator argues. Allowing the bankruptcy of troubled lender Credit Suisse would have crippled Switzerland's economy and financial center and likely resulted in deposit runs at other banks, Swiss regulator FINMA said Wednesday.
ZURICH, June 6 (Reuters) - A group of Credit Suisse bondholders holding $82 million worth of the failed bank's Additional Tier 1 (AT1) debt have filed a lawsuit against Switzerland seeking compensation, U.S. court filings on Thursday showed.
Credit Suisse bondholders holding a total of $82 million of the stricken bank's Additional Tier 1 debt, which was wiped out in UBS's takeover of its rival, have sued the Swiss authorities. The takeover, sometimes branded a “shotgun wedding,” was at the behest of the Swiss federal government in March 2023.
Largest shareholders include Norges Bank, UBS Group AG, Vanguard Group Inc, Massachusetts Financial Services Co /ma/, Credit Suisse Ag/, Ubs Asset Management Americas Inc, Dodge & Cox, Zurcher Kantonalbank (Zurich Cantonalbank), Fmr Llc, and Cevian Capital II GP LTD .
In terms of global assets under management, UBS was more than twice the size of Credit Suisse. Inside Switzerland, however, Credit Suisse was far closer, with a market share in loans of 12%, versus 14% at UBS.
The bailout of CS played out over only a few months. To recapitulate, on August 11, 2023, UBS had terminated the loss guarantee and PLB. By then, it had also paid back all emergency loans.
Credit Suisse shares have lost 86% in value over the last 12 months after the lender was hit was a collapse in customer confidence, necessitating a state-orchestrated rescue by its larger Swiss peer. The final price underlines a massive collapse in value at Credit Suisse.
It was repeatedly said that Credit Suisse originally had a trust problem, but not a liquidity problem. One thing is clear: there is deposit insurance in Switzerland to protect account balances (deposits) in the event of an insolvency of a bank or securities firm.
Shakeups of Credit Suisse's board, particularly in the aftermath of the Greensill and Archegos scandals, led to a loss of institutional knowledge at the lender. This left Credit Suisse's board unable to find long-term solutions to its shortcomings, leading to a “poor risk culture” inside the institution.
Credit Suisse shares were removed from the stock exchange in June and exchanged for UBS shares. There was one new UBS share for 22.48 Credit Suisse shares.
and UBS Switzerland AG was completed on 1 July 2024. This in itself will not change the day-to-day banking relationship for Credit Suisse clients. It does, however, form the basis for the transfer of Credit Suisse banking relationships and products to UBS systems, which is planned for 2025.
As of 30 August 2024, Credit Suisse Asset Management (Schweiz) AG has been deregistered from the Commercial Register of the Canton of Zurich and has ceased to exist as a separate entity. UBS Asset Management Switzerland AG has succeeded to all the rights and obligations of Credit Suisse Asset Management (Schweiz) AG.
As of 12 June 2023, we have formally acquired Credit Suisse, less than three months after discussions about combining the two banks were started by the Swiss Federal Department of Finance, Swiss Financial Market Supervisory Authority (FINMA) and the Swiss National Bank.
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