Saudi bank chief resigns after Credit Suisse comment

Shares of the Swiss bank tumbled after Ammar Al Khudairy warned of a funding cut-off

The chairman of Saudi Arabia’s largest lender, the Saudi National Bank (SNB), Ammar Al Khudairy, has resigned his position, the bank announced on Monday. The resignation, officially “due to personal reasons,” came mere days after his comments triggered a share price collapse of Switzerland’s second-largest bank, Credit Suisse.

When asked in an interview with Bloomberg TV whether the SNB would be open to providing additional capital to Credit Suisse, Al Khudairy responded, “The answer is absolutely not, for many reasons outside the simplest reason which is regulatory and statutory.”

Earlier this month, the SNB rejected a plea from Credit Suisse to provide more funding because, according to the lender, owning more than a 10% stake in the Swiss bank would have caused a “regulatory issue” with the Saudi government.

The banker’s comments sent shares of Credit Suisse plummeting to their lowest level on record. They also caused more turmoil in a global banking sector still reeling from the recent failures of three US lenders. Credit Suisse narrowly avoided insolvency itself, saved by a government-brokered rescue acquisition by rival UBS.

While Al Khudairy’s statement was not the only source of Credit Suisse’s troubles – the bank has been plagued by deposit outflows since last year surrounding a series of scandals and regulatory issues – it exacerbated the crisis of confidence in the bank, analysts say.

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SNB, which is 37% owned by the Saudi sovereign wealth fund, has suffered significant losses on its investment in Credit Suisse, which has plunged by about $1 billion in a matter of months. The Saudi bank has itself lost more than $26 billion in market value since the start of the turmoil.

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