Bloomberg: Arab Gulf states investments suffered big losses in Credit Suisse

Arab Gulf states investors, who own about 20% of the shares of the troubled Swiss Credit Suisse Bank, are among the biggest losers from the crisis that struck the bank and led to its sale to the competing bank, UBS Group, at a very low price.

Bloomberg reported that the National Bank of Saudi Arabia, which is the largest shareholder in Credit Suisse, lost about $1 billion in the value of its investment in the Swiss bank within a few months.

The value of the Qatar Investment Authority share, amounting to 6.8% of the total shares of Credit Suisse, has collapsed sharply since last January.

Bloomberg indicated that the value of the Saudi Bank’s share of 9.9% in Credit Suisse shares fell to about 304 million francs ($329 million) after UBS Group’s offer to buy the latter.

The National Bank of Saudi Arabia, in which the Saudi Public Investment Fund owns 37% of its shares, bought its stake in Credit Suisse for 1.4 billion francs late last year.

Arab Gulf states investors used to invest in troubled European banks such as Credit Suisse many years ago, but the degrees of success of these investments varied.

Investment funds based in Abu Dhabi also invested in the American Citigroup and the British Barclays Bank during the global financial crisis in the fall of 2008.

Swiss bank UBS agreed to buy its troubled rival Credit Suisse for 3 billion francs ($3.24 billion).

This step came after the Swiss Federal Ministry of Finance, the Central Bank and the Swiss Financial Market Supervisory Authority asked the two banks to quickly complete the deal to restore the necessary confidence in the stability of the Swiss economy and banking system, according to a statement issued by Credit Suisse on Sunday evening.

According to the terms of the deal, each Credit Suisse shareholder will receive one UBS share for every 22.48 shares he owns in Credit Suisse, equivalent to 0.76 francs for each Credit Suisse share, bringing the total value of the deal to about 3 billion Swiss francs.

The market value of Credit Suisse, as of the close of trading last week, was $8.55 billion.

The merger is expected to be completed by the end of this year, as UBS expects the deal to lead to a reduction in annual operating expenses of more than $8 billion by 2027.

UBS said it was confident that all Credit Suisse employees would continue in their jobs after the merger.