Credit Suisse rose as much as 7.5% on the prospect that Saudi Arabian Crown Prince Mohammed bin Salman will take a stake in the Swiss firm’s planned investment bank spin out.
Bin Salman may put about $500m into the vehicle, according to people with knowledge of the matter. Other investors may include former Barclays chief executive Bob Diamond’s Atlas Merchant Capital, the people said, asking not to be identified as the deliberations are private.
It’s unclear whether the Crown Prince’s interest would come in a personal capacity or through other investment vehicles in the Kingdom.
Saudi Arabia investment in Credit Suisse
The Saudi National Bank, 37% owned by the nation’s sovereign wealth fund, is already an anchor investor in Credit Suisse’s $4bn ongoing capital raise.
A further investment by the oil-rich nation would boost confidence in the lender’s restructuring efforts. Bank executives have already said several parties are interested to invest in the reprisal of the Credit Suisse First Boston brand under veteran dealmaker Michael Klein.
Credit Suisse declined to comment. Saudi Arabia’s Center for International Communications didn’t immediately respond to request for comment.
The Zurich-based bank extended gains from Friday, when comments by Chairman Axel Lehmann helped break a 13-day losing streak. The stock traded up 5.4% at 3.11 Swiss francs at 12:10 p.m in Zurich. They’re down about 63% this year.
Lehmann said that the bank’s liquidity situation had improved and the huge outflows of client assets earlier in the quarter had been stemmed.
Declines of the past weeks had pushed the shares near the level that the Swiss lender is pitching to investors in the capital raise, damaging the offer’s attractiveness to investors.
The First Boston business Klein is taking over will attempt to protect and restore some of the lender’s historically strongest investment banking businesses, such as in mergers and acquisitions and leveraged finance.
The Swiss firm’s investment bank division was named Credit Suisse First Boston for almost two decades before it decided in 2005 to retire the name in favour of one moniker for all its businesses.
The potential investment by the Saudi Arabian leader would be a further demonstration of the strength of Klein’s Middle East ties.
His connections in the Kingdom have been a key part of the plans for the investment bank and the capital increase. He was directly involved in helping line up the investment by Saudi National Bank, allowing it to take a stake of as much as 9.9%, according to people with knowledge of the discussions.
The dealmaker’s links with the Middle East stretch back at least to his Citigroup days, where he led negotiations during the financial crisis over a $7.5bn capital injection from Abu Dhabi. He also oversaw the Citigroup team that helped Dow Chemical get financing from Kuwait Investment Authority.
Credit Suisse announced on Monday that it had also completed the $5bn in new debt issuance, part of plans to shore up its balance sheet, and would provide an updated funding plan for 2023 when it releases fourth quarter earnings on February 9.
The new shares will begin trading on December 9.
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