Credit Suisse Group AG rose as much as 7.5% on Monday the 5th of December, on the prospect that Saudi Arabian Crown Prince Mohammed bin Salman will take a stake in the Swiss firm’s planned investment bank spin out. Bin Salman is considering placing around $500 million into the vehicle, according to people with knowledge of the issue. Other potential investors include former Barclays Plc chief executive Bob Diamond’s Atlas Merchant Capital, the people said, asking not to be identified as the deliberations are private according to Bloomberg news. It is yet unknown whether the Crown Prince’s interest would come in a personal capacity or through other investment vehicles in the Kingdom.
The Saudi National Bank, 37% owned by the nation’s sovereign wealth fund, is already an anchor investor in Credit Suisse’s $4 billion ongoing capital raise. An additional investment by the oil-rich nation would boost confidence in Credit Swiss’s restructuring efforts. The Swiss firm’s executives have already said several parties have shown interest in investing in the reprisal of the Credit Suisse First Boston brand under veteran dealmaker Michael Klein. If anyone has emerged as the ‘winner’ from the Credit Suisse breakup, it’s Michael Klein, the former Citi executive who will be both reversing his boutique M Klein & Co. into the spun-out capital markets and advisory business of Credit Suisse, running the new CS First Boston and receiving a ‘substantial’ shareholding in the process. However, Credit Suisse declined to comment. According to Media, Klein has a few things in his favour. He’s polite and hard-working and the sort of person to see clarity and opportunity amidst uncertainty and dislocation according to an effusive former colleague. He’s also on very good terms with the ruling elite in Saudi Arabia, and this is turning out to be a great advantage both for Klein, for Credit Suisse, and for anyone who holds Credit Suisse stock in their bonus.
Credit Swisse extended gains from Friday, when comments by Chairman Axel Lehmann helped break 13-day losing streak. They’re down about 63% this year. Lehmann said that the bank’s liquidity situation had improved and the huge outflows of client assets earlier in the quarter had been stemmed.
Seeking to restore vigor to a business that has been languishing, Credit Suisse in October said that it will reshape its investment bank by resurrecting the First Boston brand.
Credit Suisse’s history with the First Boston brand dates to 1978 when the pair linked up to operate in the London bond market. They later merged to create CS First Boston, but a tough period followed after famed bankers departed and the firm ran into regulatory troubles. Some bankers and investors have expressed scepticism over its ability to regain its past glory in a shrinking market.
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