How Will the Losses of Gulf Countries Caused by Credit Suisse Impact Global Banking Deals?

Investors in the Middle East, particularly in the Gulf countries, were affected by the crisis of the Swiss “Credit Suisse” group, which raised questions in the Western media about the next steps of these countries, specifically 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.

This panic, according to the agency, came after the loss of the National Bank of Saudi Arabia, the largest shareholder in “Credit Suisse”, about one billion dollars of the value of its investment in the Swiss bank within a few months. The value of the Qatar Investment Authority share, amounting to 6.8 percent of the total shares of “Credit Suisse”, has also collapsed sharply, since last January.

Therefore, Bloomberg believes that the Gulf countries are likely to be more cautious about deals involving foreign financial companies.

Bloomberg talked about fears of the Gulf’s reluctance to invest in banking deals, explaining that this would mean a loss of liquidity after the recent rise in oil prices, and this would be a blow to the global financial sector.

With regard to the Saudi position, the agency quoted a number of bankers as saying that the crisis is accelerating the shift of Gulf investments, specifically Saudi Arabia, towards other sectors such as health care and technology.

The Saudi investment in “Credit Suisse” was supposed to be the Kingdom’s entry to the global banking sector, which would enhance its emerging position as an investment powerhouse, fueled by oil, according to the newspaper.Wall Street JournalAmerican.

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

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

A group of Gulf investors, including a bank and a sovereign investment agency, have become among the biggest losers due to the turmoil that struck the Credit Suisse banking group, which culminated, according to Bloomberg, with the UBS group agreeing to acquire the troubled bank for an amount less than its estimated value.

The Wall Street Journal agreed with Bloomberg that Saudi investments in Credit Suisse had almost completely evaporated, after the UBS Group acquired the Swiss bank.

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

With regard to Qatar’s position, “Bloomberg” stated that after the recent losses incurred by the “Credit Suisse” bank, the Qatar Investment Authority, which is a sovereign wealth fund affiliated with Qatar and one of the largest supporters of “Credit Suisse”, is reviewing its banking holdings and evaluating its total portfolio amid escalating economic risks. Globalism.

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The agency quoted a senior official in the Qatari Fund, as saying that the Qatar Investment Authority has no immediate plans to reduce its banking assets, and believes that the current turmoil in the market represents an opportunity to negotiate better terms and structure better investments.

With regard to the UAE, Bloomberg reported last February that First Abu Dhabi Bank was studying a possible offer to buy the British Standard Chartered Bank in the range of $30 billion to $35 billion, but canceled it. Reuters expects the bank to rethink the matter now.

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

In fact, sovereign funds are increasingly cautious in their approach to global banks, according to Bloomberg, which believes that, however, new funds with great ambitions may try to bail out affected banks on the grounds that this will bring more global recognition to the Gulf states.

And the “Bloomberg” prediction is supported by the managing director of the data provider “Global SWF”, Diego Lopez, in a statement to “Reuters”, as he said that the Gulf sovereign wealth funds took advantage of the opportunity in 2008 and could do so again and distribute their surpluses.

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

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