The Credit Suisse Group logo in Davos, Switzerland, Monday, January 16, 2023.
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The Qatar Investment Authority is the second shareholder of Swiss credit after doubling its stake in the troubled Swiss lender late last year, according to a filing with the U.S. Securities and Exchange Commission.
The QIA – Qatar’s sovereign wealth fund – initially started investing in Credit Suisse at the time of the financial crisis. It now owns 6.8% of the bank’s shares, according to Friday’s filing, second only to the 9.9% stake bought by the Saudi National Bank last year in a 4-year capital raise. $.2 billion to fund a massive strategic overhaul.
Combined with the 3.15% held by Saudi family-owned Olayan Financing Company, about a fifth of the company’s shares are now held by Middle Eastern investors, according to Eikon data.
Credit Suisse will release its fourth-quarter and full-year results on February 9 and has already forecast a 1.5 billion Swiss franc ($1.6 billion) loss for the fourth quarter due to the restructuring in Classes. The shake-up is designed to address the investment bank’s continued underperformance and a series of risk and compliance lapses.
CEO Ulrich Koerner told CNBC at the World Economic Forum in Davos last week that the bank was making progress in transformation and had seen a noticeable reduction in customer outflows.
The injection of investment from the Middle East comes as major US investors Harris Associates and Artisan Partners sell their shares in Credit Suisse. Harris remains the third largest shareholder at 5%, but has reduced its stake significantly over the past year, while Artisan has sold its position entirely.
Earlier this month, German Bank resumed its coverage of Credit Suisse with a “hold” rating, noting that the strategy update announced in October and the subsequent rights issue in December marked the start of the group’s “final pivot to growth more stable, higher, higher yield, higher multiple activities.”
“Although strategically, the right measures have been widely announced in our opinion, the execution of the group’s transformation requires time to reduce costs, regain operational momentum as well as reduce the cost of financing complexity. We therefore expect moderate profitability, below potential, even in 2025,” said Benjamin Goy, head of European finance research at Deutsche Bank.
As such, he said Credit Suisse’s valuation was “not cheap based on earnings any time soon.”
“More art than science”
At the heart of Credit Suisse’s new strategy is the spin-off of its investment bank to form CS First Boston, which will be led by former Credit Suisse board member Michael Klein.
In a note earlier this month, Barclays Co-head of European banking equity research Amit Goel called Credit Suisse’s earnings estimates “more art than science”, saying details remain limited on the contribution to corporate earnings abandoned.
“For Q422, we will focus on what is driving the losses (we struggled to reach around CHF 1.1 billion of underlying losses in the quarter), if there are any signs stabilization in the company and if there are more details on the restructuring,” he added.