Former top Credit Suisse shareholder sells full stake in bank

BENGALURU – One of Credit Suisse’s longest major shareholders has sold its entire stake in the Swiss bank after losing patience with its strategy to stop persistent losses and a client exodus.

The investment was exited over the past three to four months, said Mr David Herro, chief investment officer for international equities at Harris Associates, in an e-mail. The Financial Times newspaper reported the sell-down earlier.

Harris had owned Credit Suisse stock since the early years of this century and doubled down on its bet after the 2008 financial crisis. While Mr Herro defended the bank when its troubles started, he grew more critical of the board as the lender struggled to fix its investment bank and move past losses and scandals.

“There is a question about the future of the franchise. There have been large outflows from wealth management,” FT quoted Mr Herro as saying.

Credit Suisse customers withdrew an unprecedented 110.5 billion Swiss francs (S$158.8 billion) in the fourth quarter. Shares of Credit Suisse have erased about 95 per cent of their value since the summer of 2007.

“We have lots of other options to invest,” Mr Herro added. “Rising interest rates mean lots of European financials are headed in the other direction. Why go for something that is burning capital when the rest of the sector is now generating it?”

Harris was the biggest shareholder in Credit Suisse for many years, and halved its 10 per cent holding towards the end of 2022 to 5 per cent. 

Saudi National Bank is now the largest holder in Credit Suisse, according to the Zurich-based lender’s website and data compiled by Bloomberg. The Qatar Investment Authority also boosted its stake after Credit Suisse issued new shares as part of a capital raise of 4 billion Swiss francs late last year. 

Credit Suisse last month reported its biggest annual loss since the 2008 global financial crisis after rattled clients pulled billions from the bank, and it warned of a further “substantial” loss this year.

It has also been escalating efforts to win back clients and stem an exodus of senior staff that has dealt a blow to its wealth business, which it sees as key to its revival.

Mr Herro also criticised Credit Suisse’s plan to spin out its investment bank under the leadership of investment banker Michael Klein. The proposal was “cumbersome” and would burn through more cash than Mr Herro expected, FT reported.

In an e-mailed statement to Reuters on Sunday, Credit Suisse said: “We are ahead of our plan and have clear strategic objectives.”

It added: “We are laser-focused on successfully executing our plan and on progressing towards our targets to ensure new Credit Suisse delivers sustainable value for all our stakeholders.” REUTERS, BLOOMBERG