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FINMA blocks Saudi National Bank’s attempt to increase Credit Suisse stake

Through the transaction, Saudi National Bank was able to reduce its share in Credit Suisse to just 0.5% of UBS

According to a report published in the daily Blick, the Saudi National Bank reportedly desired to grow its interest in Credit Suisse from 9.88% to about 40% but was stopped by the Swiss regulatory authority FINMA.

On March 19, 2023, when Switzerland’s second-largest bank was on the verge of failing, authorities arranged a quick rescue plan in which UBS agreed to buy Credit Suisse for a bargain price of three billion Swiss francs (USD 3.4 billion).

Before a non-Swiss investor can purchase more than a 10% share in a large Swiss bank, they must first receive authorization from FINMA.

According to a report in the Swiss tabloid Blick, which did not identify its sources, it was unclear why the Swiss Financial Market Supervisory Authority (FINMA) blocked the plan that would have entailed Saudi National Bank, which was already the largest shareholder in Credit Suisse, injecting USD 5 billion into the bank.

In June 2023, UBS successfully completed its emergency purchase of Credit Suisse, creating a banking and wealth management colossus in Switzerland with a balance sheet worth USD 1.6 trillion and the ability to manage assets worth more than USD 5 trillion.

Through the transaction, Saudi National Bank was able to reduce its share in Credit Suisse to just 0.5% of UBS.

However, the latest media reports state that the UBS Group will cut over half of Credit Suisse Group’s workforce starting from July 2023.

Bankers, traders and support staff in Credit Suisse’s investment bank in London, New York, and in pockets of Asia will bear the brunt of the job cuts, reports claimed.

Staffers have been told to expect three rounds of employee downsizing in 2023 alone, with the first expected by the end of July and two more rounds tentatively planned for September and October, news outlet Fortune reported.

UBS, whose combined workforce jumped to about 120,000 after the emergency takeover of Credit Suisse, is now aiming to save some USD 6 billion in staff costs in the coming days.

“UBS intends to ultimately reduce the total combined headcount by about 30%, or 35,000 people. That’s broadly in line with an overall reduction of around 30,000 estimated by analysts at Redburn in a report on UBS this month (June 2023). Headcount at Credit Suisse currently stands at about 45, 000,” the Fortune report commented further.

Meanwhile, a Swiss parliamentary investigation will start in July 2023, as it aims to establish the reasons behind Credit Suisse’s downfall.

As per a Reuters report, the 14-member commission will focus on the Swiss authorities’ actions before and during the emergency takeover of Credit Suisse rather than its management’s role.

“It will examine the conduct of the Swiss cabinet, the finance ministry and other state bodies, such as financial market regulator FINMA and the Swiss National Bank,” the report commented.

“The investigation is not a judicial process, but it may provide material for cases launched in the aftermath of the collapse, if it uncovers discrepancies or new information,” it added further.

“These include lawsuits against FINMA over its decision to write down to zero 16 billion francs of AT1 bonds, and by Credit Suisse investors over the share swap ratio with UBS,” it said.

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