Qatar Investment Authority plans to raise Credit Suisse stake

The QIA already owns a 5% stake in Switzerland’s second-biggest bank. © Keystone / Michael Buholzer

Deal will see up to a quarter of the Swiss bank being owned by Middle Eastern investors

The Qatar Investment Authority (QIA) plans to increase its stake in Credit Suisse by investing in a share sale alongside the Saudi National Bank (SNB), according to people with knowledge of the talks.

The deal will result in up to a quarter of Credit Suisse stock being owned by Middle Eastern investors, as the scandal-plagued lender seeks to raise CHF4 billion ($4 billion) to fund a radical restructure.

Last week, the Swiss bank announced it would strip back and spin off its investment bank, reduce its global workforce by 9,000 and cut CHF2.5 billion of costs in a three-year strategic revamp aimed at moving on from a succession of crises and quarterly losses.

The SNB – whose own largest shareholder is the Public Investment Fund, the Saudi sovereign wealth fund – has agreed to invest CHF1.5 billion in Credit Suisse for a 9.9% stake.

While the majority of the investment will be made through a CHF1.76 billion initial share placement, to be signed off at an extraordinary general meeting on November 23, the SNB will also take part in a CHF2.24 billion rights issue later in the year.

The SNB will be joined by two other investors in the share placement, including QIA, which already owns 5% of Credit Suisse stock.

One person with knowledge of the deal said the third investor was a Swiss group, though not a rival bank.

Credit Suisse’s largest investor, US investment group Harris Associates, will not take part in the share placement, but is expected to buy more stock as part of the rights issue, according to people with knowledge of the deal.

Olayan Group, an investment company owned by a wealthy Saudi family, is also not expected to take part in the share placement, but would retain its stake of about 5% in the bank by participating in the rights issue.

After the share sales, SNB, QIA and Olayan will own between 20-25% of Credit Suisse stock. SNB is keeping its stake in the bank at less than 10% to avoid complications with the Swiss regulator, according to people with knowledge of the plans.

The QIA and Olayan both started investing in Credit Suisse during the financial crisis.

Credit Suisse is acting as global co-ordinator on the rights offering and has enlisted Deutsche Bank, Morgan Stanley, RBC Capital Markets and Société Générale as lead underwriters. Over the weekend, Credit Suisse added 14 other banks to the syndicate.

“This was done as a show of strength to give comfort to the market,” said one of the bankers involved in the discussions.

Credit Suisse executives had been in discussions with some banks over the summer about a potential capital raise, according to people with knowledge of the plans. But those talks were formalised at the start of October as the bank fought back against social media rumours about its financial strength and new chief financial officer Dixit Joshi started his job.

Copyright The Financial Times Limited 2022