Credit Suisse's largest shareholder, Qatar, has lowered its stake. The oil-rich emirate's purchasing rights in the Swiss bank have also fallen following a cap hike.
Qatar's sovereign wealth fund has been the Zurich-based bank's biggest shareholder since the financial crisis of 2008-09. Then, the cash-rich emirate helped Credit Suisse avert a state bailout by injecting billions in capital into the bank.
The move came at a price: the infusion was designed as convertible bonds in Credit Suisse, for which the bank has paid a coupon of between 9 and 9.5 percent.
In the nearly ten years since the capital top-up, Credit Suisse has repaid hundreds of millions annually to Qatar – while regular shareholders have often made do with scrip, or stock, dividends. A Qatari representative on the bank's board safeguarded the ties.
Sharp Drawdown
That changed this year: Qatar's board representative, Jassim Bin Hamad J.J. Al Thani, left the bank earlier this year with little explanation and no replacement. However, Qatar did participate in Credit Suisse's 4 billion Swiss franc capital-raising to full up its depleted cushion of capital.
Now, Qatar has sharply lowered its overall stake in Credit Suisse. The emirate now holds 4.94 percent of shares and 10.97 percent in convertible instruments, from 5.01 in shares and 12.96 percent in the securities.
Credit Suisse Boycott
A spokesman for the bank said Qatar has sold stock, but left untouched its stockpile of convertible securities. The reduction in purchasing rights is merely the effect of the April cap hike diluting Qatar's stake.
The stock sale comes against the backdrop of tensions between the emirate and Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates. The neighbor states have cut off and isolated Qatar, which they accuse of links to terror funding.
The move has unpleasant consequences for Credit Suisse as well, as finews.com recently reported. Abu Dhabi is reportedly boycotting banks in which Qatar is invested. Besides Credit Suisse, those include Germany's Deutsche Bank and London's Barclays Bank, also a crisis beneficiary of Qatar's generosity.
