Harris Associates sold its entire stake in Credit Suisse Group AG, according to the Financial Times, ending ties with the firm after about two decades of ownership and piling further pressure on the Swiss bank’s leadership.
“There is a question about the future of the franchise,” the FT cited David Herro, chief investment officer for international equities at Harris, as saying. “There have been large outflows from wealth management. ”
Harris was the biggest shareholder in Credit Suisse for many years, and halved its 10% holding toward the end of 2022 to 5%. The stock sank to a record low last week, sliding in the wake of last month’s financial results that showed a larger-than-expected loss following record outflows.
Shares of Credit Suisse have erased about 95% of their value since the summer of 2007. The bank has missed out on a rally at its European peers that began late last year as monetary tightening boosted prospects for lending profitability.
“Rising interest rates mean lots of European financials are headed in the other direction,” Herro was quoted as saying. “Why go for something that is burning capital when the rest of the sector is now generating it?”
Herro didn’t immediately respond to an email seeking additional details on the disposal.
Credit Suisse has been escalating efforts to win back clients and stem an exodus of senior staff that has dealt a blow to its wealth business, which it sees as key to its revival. Customers withdrew an unprecedented 110.5 billion Swiss francs ($118 billion) in the fourth quarter.
Herro also criticized Credit Suisse’s plan to spin out its investment bank under the leadership of Michael Klein, saying the proposal was “cumbersome” and would burn through more cash than Herro expected, the FT reported.
Harris owned Credit Suisse stock since the early years of this century and doubled down on its bet after the 2008 financial crisis. While Herro defended the bank when its troubles started, he grew more critical of the board as the lender struggled to fix its investment bank and move past losses and scandals.
The Saudi National Bank is now the largest holder in Credit Suisse, according to the Zurich-based lender’s website and data compiled by Bloomberg. The Qatar Investment Authority also boosted its stake after Credit Suisse issued new shares as part of a 4 billion Swiss franc capital raise late last year.
