Saudi Arabia Loses 1.5 Trillion Won in Investment Failure Decided by Crown Prince's Directive

[Image source=Yonhap News]

Saudi Arabia recently suffered losses exceeding 1 trillion won due to a failed investment in Credit Suisse (CS).

According to foreign media such as CNBC on the 21st, Saudi National Bank (SNB), the largest shareholder of CS, 'bet' approximately 1.5 billion dollars (about 1.9 trillion won) on CS under the direction of Saudi de facto ruler Crown Prince Mohammed bin Salman, despite Saudi concerns. This resulted in a loss of about 1.2 billion dollars (approximately 1.5 trillion won), which is about 80% of the investment.

CS was acquired the previous day by its competitor UBS for 3 billion Swiss francs (about 4.2 trillion won). Swiss authorities decided to fully write off the 17 billion dollars (about 22.2 trillion won) worth of contingent convertible bonds (CoCo bonds, AT1) issued by CS, causing many investors to incur losses.

According to foreign media, Saudi Arabia made this investment decision during Russia's invasion of Ukraine last year as part of its business diversification strategy. The purchase price at that time was 3.82 Swiss francs per share, but after the acquisition by UBS, it is reported that only about 0.76 Swiss francs per share, roughly 20%, could be recovered.

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