By Chris Dorrell
Chair of Saudi National Bank (SNB) Ammar Al Khudairy stepped down today after the bank chalked up a $1.2bn loss on its investment in Credit Suisse.
SNB said in a statement that Al Khudairy had resigned for “personal reasons” and the current chief executive, Saeed Mohammed Al Ghamdi, will takeover as chair of the lender.
The Saudi National Bank became Credit Suisse’s largest shareholder in October last year after acquiring a 9.9 per cent stake for $1.5bn.
In an interview with CNBC earlier this month, however, Al Khudairy said the bank would “absolutely not” provide any more capital to Credit Suisse to take its stake above 10 per cent.
Following the interview, investors in the bank took fright, fearing that it might run out of cash, leading to a 30 per cent fall in the bank’s share price on the day.
By the end of the week Credit Suisse’s 167 year history as an independent entity came to an abrupt end when it was acquired by UBS for $3bn.
As a result, SNB faced a $1.2bn loss on its investment, although the bank has said this loss would not affect its investment plans. The investment represented just 2.2 per cent of its total investment portfolio.
Discussing the initial investment with the Financial Times last December, Al Khudairy said “we write cheques of that size frequently, I can assure you. This is just another cheque of that size.”
Although accepting the investment was a risk, Al Khudairy seemed confident it would pay off. “When was the last time the system allowed for such a venerable global brand to simply keel over?” he said. “That’s what it’s going to take for us to lose significant money.”
Financial institutions from the Middle East have been taking a more prominent role in global banks recently – often backed by national sovereign wealth funds.
SNB’s biggest shareholder is the Saudi Public Investment Fund, which is controlled by Crown Prince Mohammad bin Salman.
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