Riyadh: Saudi National Bank, which holds about a 10 per cent stake in Credit Suisse AG, said it will raise its paid-up capital by $4.1 billion to strengthen its financial position.
The lender, which is 37 per cent owned by the kingdom’s sovereign wealth fund, will boost its capital by about a third to 60 billion Saudi riyals ($16 billion) through a bonus share offering from its retained earnings, it said in a statement on Thursday. The board recommended one share for every three shares held.
Because the bonus shares will be transferred from the bank’s retained earnings “there is no impact on capital ratio,” said senior Bloomberg Intelligence analyst Edmond Christou. “However, this means the new paid-up capital now stands at 60 billion riyals compared with 31 billion riyals for statutory reserves. As per regulation, this implies an acceleration of statutory reserve build up from future earnings to bring it up to the new paid-up capital.”
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Saudi National Bank was an anchor investor in Credit Suisse’s capital raise and now holds 9.9 per cent in the firm, making it the Swiss lender’s top shareholder. In an interview in October, the bank’s Chairman Ammar Al Khudairy said he liked Credit Suisse’s new leadership and their resolve to execute on its turnaround plan, though any additional equity was “out of the question.”
Saudi Crown Prince Mohammed bin Salman is now weighing whether to put about $500 million into Credit Suisse’s planned investment bank spin out, people with knowledge of the matter have said.
Saudi National Bank shares gained as much as 2.9 per cent, the most in more than three weeks. The bank also said it will pay 0.60 riyal per share dividend for second-half of last year.