Qatar Investment Authority began investing in Credit Suisse during the 2007-2008 global financial crisis.
Saudi National Bank (SNB), Credit Suisse’s largest shareholder prior to its acquisition by UBS this month, named a new chairman after Ammar Al-Khudairy announced his resignation.
Al-Khudairy will be replaced by SNB Managing Director and CEO Mohammed Al-Ghamdi, the bank informed the Saudi stock exchange. Talal Ahmed Al Khereiji was chosen by the bank to serve as the acting CEO.
A statement issued on Monday read that Al-Khudairy is resigning “for personal reasons.”
However, the declaration comes after his remarks to Bloomberg on 15 March in which he said that the Saudi bank will not increase its position in Credit Suisse, worsening the share price decline of the ailing European bank.
“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” he said.
Despite the fact that Al-Khudiary’s views were “fairly consistent with what the bank had said in October,” the interview reportedly caused investor fear, resulting in a 24% decline in shares of Credit Suisse, according to Market Watch.
Al-Khudairy’s remarks sparked an investment frenzy, driving the shares of the faltering bank to a record low. Al-Khudairy later said on CNBC television that “if you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses” in an attempt to downplay what he called a ‘panic,’ according to reports.
In a $3.2 billion deal mediated by Swiss regulators last week, Credit Suisse was saved by a longtime domestic rival, Swiss banking giant UBS, which also came at a significant discount, reports said.
Qatar and Saudi Arabia stand to lose a significant amount from their Credit Suisse investments, following reports on UBS reaching a discounted agreement to purchase the scandal-plagued Swiss investment bank.
The Qatar Investment Authority doubled its stakes in the Swiss bank in January, reaching just below 7%. This move granted it the second-largest shareholder within the the entity after the Saudi National Bank, which is the largest bank in kingdom.
The Saudi National Bank invested $1.5 billion for a 9.9% stake in Credit Suisse less than six months ago. Since purchasing a 9,9% stake in Credit Suisse last year, SNB has lost $1 billion on its investment.
Unprecedented rate hikes by central banks have already put a strain on a sector that has been shaken by the forced sale of the 166-year-old, storied investment bank Credit Suisse to UBS and the failure of Silicon Valley Bank and Signature Bank in the US.
Global central banks began hiking borrowing prices last year to control the inflation that was out of control. The banking system, however, was put under pressure due to the sudden rise in interest rates.