Informed sources say the Kingdom of Saudi Arabia and Abu Dhabi are considering whether to inject money into the investment bank. for the Credit Suisse group. And other companies to take advantage of the decline in values.
Two sources, who declined to be named because the talks are private, said Riyadh and Abu Dhabi were separately evaluating potential investments through sovereign wealth funds such as Abu Dhabi’s Mubadala Investment Company and Saudi Arabia’s Public Investment Fund. According to a report published by the Bloomberg agency and seen by Al Arabiya Net, the agreement could also come through other instruments in which each country has large stakes.
The deliberations are at an early stage and it is unclear whether they will result in confirmed offers. They said potential investors are concerned about the risks of future losses or legal problems.
Credit Suisse shares fell more than the banking index, having lost about half of their value this year.
The bank has less than two weeks to reveal the details of the latest restructuring, including a possible separation between the advisory and leveraged finance businesses. One of the sources said the potential investment in this entity has been discussed at the highest levels of government in Abu Dhabi.
“We will release the latest results on our full strategy review when we report third quarter earnings. It would be premature to comment on any results before then,” Credit Suisse said in a statement. The Abu Dhabi Media Office and the Saudi Arabia Public Investment Fund did not immediately have representatives to comment. Mubadala declined to comment.
Bloomberg reported earlier this month that the bank is looking to engage an outside investor to inject money into part of its investment banking and advisory business.
Separating the trading and underwriting unit would effectively split the troubled investment banking division into three parts, with Credit Suisse keeping a shrinking trading unit while losing its securitized product portfolio and other assets it wishes to divest.
As part of the changes, investment banking chief Christian Messner will be leaving in the coming weeks and his departure is likely to be announced along with other steps on Oct.27, people familiar with the matter previously said.
Credit Suisse has long relied on wealthy Middle Eastern investors as its major shareholders, including the Qatar Investment Authority and Saudi Arabia’s Olayan Group. They invested frequently in times of need, including the Qatar Investment Authority’s participation in issuing nearly $ 2 billion in Credit Suisse convertible bonds in April 2021. This helped strengthen the balance sheet following the collapse of one of its major clients, an Archigos money management fund.
