Saudi National Bank chair resigns following Credit Suisse comments

News Desk
Tuesday, Mar 28, 2023

Dubai: The chair of Saudi National Bank, Ammar Alkhudairy, has resigned citing personal reasons after the kingdom’s largest lender was thrust into the limelight amid turmoil at Credit Suisse.

The chief executive, Saeed Al Ghamdi, will replace Alkhudairy as chair, the bank said on Monday. Talal Al-Khereiji becomes acting chief executive. In a television interview this month, Alkhudairy said SNB, which bought a 9.9 percent stake in Credit Suisse last year, would not provide any more financial assistance. He said buying more shares would have pushed SNB’s stake above 10 percent and caused a “regulatory issue”.

Alkhudairy’s comments reflected established policy at the bank but sent Credit Suisse’s share price into a tailspin, setting in train frantic negotiations that culminated in a hasty merger with Swiss rival UBS.

“The issue of the chairman’s statement did not go unnoticed amongst the senior decision makers,” said one Saudi Arabia-based banker. Regional executives said he had drawn undue attention to SNB and the kingdom’s broader economic agenda. The bank’s main shareholder is the sovereign Public Investment Fund, which is spearheading the reform programme of Saudi Arabia’s crown prince, Mohammed bin Salman.

“It wasn’t a great idea to go on TV during the middle of a banking crisis,” said one Dubai-based banker. “There was no good outcome.”

Alkhudairy is an experienced banker who used to chair the Saudi Arabian outposts of Goldman Sachs and Morgan Stanley. SNB, formed by the 2021 merger of the Samba Financial Group and National Commercial Bank, has a share of about 30 percent of the country’s banking market.

The UBS takeover of Credit Suisse resulted in about $1 billion of losses for SNB, but one person with knowledge of the details said the stake in the Swiss bank accounted for less than 2 percent of its investment portfolio and would have a negligible impact on profitability.

The rescue has caused some controversy because shareholders received a payout while holders of some bonds were wiped out, in an arrangement brokered by the Swiss authorities. The Swiss regulator has defended the deal and people close to SNB have denied pressuring for shareholder compensation.

The impact of Alkhudairy’s comments on Credit Suisse’s share price reflected Saudi Arabia’s growing financial firepower. Saudi Arabia, along with other oil-rich Gulf states, have taken a more activist approach to overseas investments as they balance investment in assets that can deliver long-term returns with a growing focus on domestic economic diversification efforts.