The chairman of one of Credit Suisse’s (NYSE:CS) newest and biggest shareholders called on the beleaguered bank to deliver a swift overhaul and return to a “very stable, conservative Swiss banking posture.”
Saudi National Bank, the kingdom’s largest lender and majority-owned by the Saudi government, announced Wednesday that it was investing up to $1.5 billion in Credit Suisse — representing a stake of up to 9.9%.
The Swiss lender posted a third-quarter net loss of 4.034 billion Swiss francs ($4.09 billion U.S.) last week, significantly worse than analyst estimates, and announced a massive strategic overhaul. Shares are down around 55% this year after several scandals, management changes and weak earnings releases.
In the anticipated strategic shift, the bank vowed to “radically restructure” its investment arm to significantly cut its exposure to risk-weighted assets, which are used to determine a bank’s capital requirements. It also aims to cut its cost base by 15%, or 2.5 billion Swiss francs, by 2025.
The SNB chairman cited Credit Suisse’s investment banking unit as the Achilles’ heel of the company, accentuated by the current climate of increased market volatility.
The investment comes on the heels of Crown Prince Mohammed Bin Salman’s encouragement of Saudi Arabia’s largest firms to actively invest overseas and bolster its profile as a global investor. Saudi Arabia’s Public
Investment Fund manages about $620 billion in assets, and is integral to the crown prince’s ambitions.
CS shares gave back seven cents, or 1.2%, to $3.14.
