Sunday, May 19, 2024

Gulf losses due to “Credit Suisse” .. How will they affect global banking deals?


Investors in the Middle East, especially in the Gulf countries, have been affected by the crisis of the Swiss “Credit Suisse” group, which has raised questions in the Western media about the next steps of these countries, especially their willingness and ability to make new investments. In international banks.

Sovereign wealth funds and other investors in the Gulf region were spooked by the global market turmoil.BloombergAmerican.

According to the agency, the National Bank of Saudi Arabia, the largest shareholder of “Credit Suisse”, came after losing about one billion dollars in value of its investment in the Swiss bank within a few months. The value of Qatar Investment Authority’s share, which is 6.8 percent of Credit Suisse’s total shares, has also fallen sharply since last January.

Therefore, Bloomberg believes that Gulf countries may be more cautious about deals involving foreign financial institutions.

“Bloomberg” spoke about the fear of the reluctance of the Gulf to invest in banking contracts, which it explains as a loss of liquidity after the recent rise in oil prices, and this will be a blow to the global financial sector.

As for Saudi’s position, citing several bankers, the crisis is accelerating the shift of Gulf investments, particularly Saudi Arabia, to other sectors such as health care and technology.

The Saudi investment in “Credit Suisse” is supposed to be the kingdom’s entry into the global banking industry, which will enhance its emerging position as an investment powerhouse, the newspaper said.Wall Street JournalAmerican.

And Saudi Arabia’s National Bank said last Monday that its strategy would not be affected by the devaluation of its investments in the Swiss bank, saying “any change in the fair value of the investment in Credit Suisse Group will not affect the bank’s financial expectations and plans for 2023.”

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Bloomberg: Gulf investors are among the biggest losers in the Credit Suisse crisis

A group of Gulf investors, including a bank and sovereign wealth fund, has become one of the biggest losers in the turmoil that has hit Credit Suisse banking group, which UBS Group has agreed to buy the troubled bank, according to Bloomberg. For an amount less than the appraised value.

The Wall Street Journal agreed with Bloomberg that Saudi investments in Credit Suisse have almost completely evaporated following the takeover of the Swiss bank by UBS Group.

The Saudi investment in “Credit Suisse” came to $1.5 billion during last year’s oil price boom, through the government-backed National Bank of Saudi Arabia and under the direction of Crown Prince Mohammed bin Salman. The Wall Street Journal”. of persons familiar with the subject.

As for Qatar’s position, one of the biggest supporters of “Credit Suisse” is the Qatar Investment Authority, a sovereign wealth fund affiliated with Qatar, after the recent losses suffered by the “Credit Suisse” bank. It is reviewing its bank holdings and evaluating its overall portfolio amid rising economic risks.

Qatar Investment Authority has no immediate plans to reduce its banking assets and the market turmoil represents an opportunity to create better terms and better investments, the company said, citing a senior official at Qatar Fund.

As for the United Arab Emirates, Bloomberg reported last February that First Abu Dhabi Bank was exploring the possibility of buying British Standard Chartered Bank for $30 billion to $35 billion, but called it off. Reuters expects the bank to now reconsider the matter.

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But the company believes it is too early to tell whether appetite for such a potential deal will be affected by the recent turmoil, people familiar with the matter said.

In fact, according to Bloomberg, sovereign wealth funds are more cautious about approaching global banks, although new funds with bigger ambitions may try to bail out distressed banks on the grounds that they will bring more global recognition to the Gulf. In the states.

And Diego Lopez, managing director of “Global SWF”, a data provider for the “Bloomberg” forecast, said in a statement to “Reuters” that Gulf sovereign funds took advantage of this opportunity in 2008. Again do so and distribute their surplus.

“2008 saw many losses in sovereign wealth funds, but also some winners. In this context, the losses of the Swiss National Bank and the Qatar Investment Authority will not deter other Gulf investors from looking for other opportunities,” he added.

Nadia Barnett
Nadia Barnett
"Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator."

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