The brand of Credit Suisse Group in Davos, Switzerland, on Monday, Jan. 16, 2023.
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The Qatar Investment Authority is the second-largest shareholder in Credit Suisse after doubling its stake within the embattled Swiss lender late last 12 months, in line with a filing with the U.S. Securities and Exchange Commission.
The QIA — Qatar’s sovereign wealth fund — initially began investing in Credit Suisse across the time of the financial crisis. Now, it owns 6.8% of the bank’s shares, in line with the filing Friday, second only to the 9.9% stake purchased by the Saudi National Bank last 12 months as a part of a $4.2 billion capital raise to fund an enormous strategic overhaul.
Combined with the three.15% owned by Saudi-based family firm Olayan Financing Company, around a fifth of the corporate’s stock is now owned by Middle Eastern investors, Eikon data indicates.
Credit Suisse will report its fourth-quarter and full-year earnings on Feb. 9, and has already projected a 1.5 billion Swiss franc ($1.6 billion) loss for the fourth quarter consequently of the continued restructuring. The shake-up is designed to deal with persistent underperformance within the investment bank and a series of risk and compliance failures.
CEO Ulrich Koerner told CNBC on the World Economic Forum in Davos last week that the bank is making progress on the transformation and has seen a notable reduction in client outflows.
The injection of investment from the Middle East comes as major U.S. investors Harris Associates and Artisan Partners sell down their shares in Credit Suisse. Harris stays the third-largest shareholder at 5%, but has cut its stake significantly over the past 12 months, while Artisan has sold its position entirely.
‘Final pivot’
Earlier this month, Deutsche Bank resumed its coverage of Credit Suisse with a “hold” rating, noting that the strategy update announced in October and subsequent rights issue in December were the beginning of the group’s “final pivot towards more stable, higher growth, higher return, higher multiple businesses.”
“While strategically largely the suitable measures have been announced in our view, the execution of the group’s transformation requires time to lower costs, regain operational momentum in addition to reduce complexity funding costs. Hence, we expect subdued profitability, below its potential, even by 2025,” said Benjamin Goy, head of European financials research at Deutsche Bank.
As such, he said that Credit Suisse’s valuation was “not low-cost based on earnings anytime soon.”
‘More art than science’
Central to Credit Suisse’s recent strategy is the spin-off of its investment bank to form CS First Boston, which might be headed by former Credit Suisse board member Michael Klein.
In a note earlier this month, Barclays Co-Head of European Banks Equity Research Amit Goel characterised Credit Suisse’s earnings estimates as “more art than science,” arguing that details remain limited on the earnings contribution from the companies being exited.
“For Q422, we might be focused on what’s driving the losses (we found it quite hard to get to c.CHF1.1bn of underlying losses within the quarter), whether there are any signs of stabilisation within the business, and if there’s more detail on the restructuring,” he added.
