Saudi National Bank (SNB) said its growth plans and profitability are unaffected by the lower valuation of its investment in Credit Suisse following the Swiss bank's takeover by its rival UBS.
SNB, the kingdom's biggest lender by assets, said its investment in Credit Suisse accounts for less than 0.5 per cent of the Saudi Arabian bank's total assets and 1.7 per cent of its investments portfolio as of December 2022. SNB's total assets exceed 945 billion Saudi riyals ($252 billion).
“Changes in the valuation of SNB’s investment in Credit Suisse have no impact on SNB’s growth plans and 2023 guidance,” it said in a filing to the Tadawul stock exchange on Monday.
SNB had acquired a 9.88 per cent stake in Credit Suisse in October 2022 for 5.5 billion Saudi riyals as a financial investment allocation within the Saudi bank's investments portfolio.
SNB's disclosure came after UBS on Sunday agreed to buy its smaller rival Credit Suisse in an all-share deal for $3.2 billion as part of a state-backed rescue deal.
SNB said the impact on its capital adequacy ratio from the mark-to-market decline in Credit Suisse was 15 basis points as of December 2022, with “nil impact on profitability”.
Following the announcement of a takeover of Credit Suisse by UBS that capital impact is 35 basis points to SNB’s capital adequacy ratio with no profitability, according to the Tadawul filing.
“SNB remains comfortably above all prudential thresholds and continues to enjoy healthy capitalisation and liquidity,” it said.
“SNB remains focused on its core strategy of growth in Saudi Arabia, which is among the fastest growing countries within the G20.”
The UBS takeover of Credit Suisse follows the collapse of Silicon Valley Bank and two other lenders in the US.
Credit Suisse had inherent weaknesses and lost its lustre after the 2008 financial crisis.
It had internal compliance shortfalls that exposed fraud, illegal acts that helped some clients in the US to evade taxes, a spying scandal that led to leadership changes, as well as exposure to New York-based investment firm Archegos Capital, which cost it $5.5 billion, and the accounting scandal involving Chinese Luckin Coffee company that it helped to go public.
UBS estimates that the combined invested assets will total $5 trillion, with the merged lender being double the size of Switzerland’s economy.
