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Credit Suisse Investment Bank Sees Abu Dhabi, Saudi Interest

Abu Dhabi and Saudi Arabia are weighing whether to put money into Credit Suisse Group AG’s investment bank and other businesses to take advantage of depressed values, people with knowledge of the matter said. The oil-rich emirate and its Gulf neighbor are separately exploring potential investments through sovereign wealth funds such as Abu Dhabi’s Mubadala Investment Co. and Saudi Arabia’s Public Investment Fund, the people said, asking not to be identified as talks are private. A deal could also come through other vehicles in which each country owns significant stakes, the people said.

Deliberations are at an early stage and it isn’t clear if they’ll lead to firm offers. Potential investors are wary about the risk of future losses or legal issues, they said. Credit Suisse shares rose as much as 8.7% in New York trading and 4.1% in Zurich. They were up 2.9% to 4.54 francs as of 4:50 p.m. in Switzerland, having lost about half their value this year. The bank is less than two weeks away from revealing details of its latest restructuring, including the potential separation of the advisory and leveraged finance business. A potential investment in that entity has been discussed at the highest levels of government in Abu Dhabi, one person said. “We have said we will update on progress on our comprehensive strategy review when we announce our third quarter earnings,” Credit Suisse said in a statement. “It would be premature to comment on any potential outcomes before then.” Abu Dhabi’s media office and the PIF in Saudi Arabia didn’t immediately have representatives available to comment. Mubadala declined to comment. Bloomberg reported earlier this month that the bank is seeking to bring in an outside investor to inject money into a spinoff of its advisory and investment banking businesses. A separation of the dealmaking and underwriting unit would effectively break the troubled investment banking division into three pieces, with Credit Suisse keeping a shrunken trading unit while hiving off its securitized products group and other assets it wants to offload. As part of the changes, investment banking head Christian Meissner is set to leave the firm in coming weeks, with his departure likely announced alongside the overhaul on Oct. 27, people with knowledge of the matter said earlier.

He was hired by Credit Suisse in Oct. 2020 to co-run a newly created group connecting clients of the wealth management unit with investment-banking services after a career that spanned Goldman Sachs Group Inc. and Bank of America Corp. He then became investment bank chief after the departure of Brian Chin following the losses from Archegos Capital Management. Credit Suisse has long counted on wealthy Middle Eastern investors as top shareholders, including the Qatar Investment Authority and Saudi Arabia’s Olayan Group. They’ve often invested in times of need, including the QIA’s participation in Credit Suisse’s approximately $2 billion convertible notes issuance in April 2021. That helped shore up the balance sheet after Archegos. An outside backer of the new separate unit could help alleviate the cost for the bank of retaining and attracting talent for a business that is almost entirely driven by key rainmaker’ relationships, people with knowledge of the matter said earlier this month. Michael Klein, a former Citigroup Inc banker, who is also a board member at the struggling Swiss lender, is helping spearhead the plan to find external investors for the investment banking unit, the people said. Klein, who is well connected in Saudi Arabia, has done several deals in the kingdom, including the initial public offering of Saudi Aramco, which is the world’s largest-ever share sale.

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