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Saudi National Bank chairman Ammar Al Khudairy's comments last week may end up being one of the most expensive answers delivered on television.
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On Sunday, UBS announced that it would take over its rival Credit Suisse for $3.2 billion, in a deal shepherded by Swiss regulators in order to head off financial panic. That’s significantly less than the $8 billion the bank was worth on market close Friday.
Saudi National Bank, Credit Suisse’s largest shareholder, will see the value of its stake, purchased for $1.5 billion in October, drop by $1.2 billion after the UBS deal, according to Bloomberg.
Comments from Ammar al Khudairy on Wednesday precipitated Credit Suisse's crisis. When asked by a Bloomberg reporter whether the Saudi bank was willing to invest more money in Credit Suisse if it required more funds, al Khudairy bluntly responded “the answer is absolutely not,” citing regulatory reasons.
“If we go above 10%, all new rules kick in,” said al Khudairy, explaining why the Saudi bank wouldn’t go beyond its current 9.9% stake.
The comment spooked Credit Suisse investors and customers, who had already gone through years of bad news, including scandals, constant leadership changes, and billion dollar losses. Saudi National Bank itself became Credit Suisse’s largest shareholder as part of a $4.3 billion capital raise the Swiss lender held in 2022 ahead of a planned restructuring.
Credit Suisse shares dropped by 24% the same day as Al Khudairy’s comments, and its bonds sank to distressed levels. By the day’s end, Credit Suisse announced it would borrow as much as $54 billion from the Swiss National Bank, the country’s central bank.
Al Khudairy later tried to walk back his previous comments, saying that Credit Suisse had not asked for assistance, and that the panic his comments sparked was “unwarranted.”
The Saudi National Bank chairman blamed the wider banking crisis, sparked by the failure of Silicon Valley Bank, for why investors jumped on his comments. “If you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses,” he told CNBC on Thursday. Yet he still refused to invest more money into Credit Suisse, again blaming regulations.