Saudi National Bank chair resigns after Credit Suisse comment that fuelled sell-off

Dubai  — The chair of top Credit Suisse shareholder Saudi National Bank (SNB) has stepped down less than two weeks after making comments blamed for contributing to the Swiss lender’s demise.

Ammar Al-Khudairy said on March 15 that the biggest Saudi bank by assets could not buy more shares in Credit Suisse on regulatory grounds.

That helped trigger to a further sell-off in the Swiss bank's shares, worsening a crisis of confidence in the lender which saw clients pull out more than $110 billion in the final quarter of 2022.

The sell-off led to a government-arranged takeover of Credit Suisse by rival UBS and saw SNB take a loss of more than $1bn on its stake of almost 9.9%.

SNB had paid 5.5-billion riyals ($1.46bn) for the stake last November.

Its own shares have shed more than $26bn in value since October 27 when it committed to making the investment.

“It (SNB’s investment in Credit Suisse) worried certain investors mainly because SNB invested overseas at a time when the domestic opportunity is more compelling,” said Shabbir Malik, an analyst at EFG Hermes.

CEO Saeed Mohammed Al-Ghamdi will take over as chair from Al Khudairy, who the bank on Monday said had resigned for personal reasons. Deputy CEO Talal Ahmed Al-Khereiji takes over as acting CEO, a bourse statement said.

The leadership changes are effective March 27.

Shares in SNB closed down 0.11% on Monday after having jumped almost 2% following the news. 

Domestic focus

SNB was formed through a merger of National Commercial Bank (NCB) and Samba Financial Group in 2021 leading to an entity with combined assets of more than 900-billion riyals ($239.66bn).

The Public Investment Fund (PIF) is its largest shareholder with a 37.24% stake, Refinitiv Eikon data showed.

SNB and PIF did not immediately respond to requests for comment.

At the time of the merger, Al-Ghamdi was the chair of National Commercial Bank, the bigger of the two entities, before taking on the role of CEO at SNB.

A Gulf source familiar with SNB’s strategy said Al-Khudairy was seen as an “international expansionist” while Al-Ghamdi was more rooted to the domestic growth story.

Al-Ghamdi’s appointment as chair indicates the bank is pivoting back to focus on domestic growth and investment, said the source, who was not authorised to speak to the media on the record.

Al-Khereiji, SNB’s new acting CEO, previously served as acting CEO at NCB, SNB’s website showed.

SNB reported a near 47% increase in net profit in 2022 boosted by higher operating income and lower impairments, as the Saudi economy rebounded post Covid-19 to record GDP growth of 8.7%.

Earlier this month, the Saudi lender said the drop in value of its Credit Suisse investment had no impact on its growth plans and would not affect profitability.

Reuters