Credit Suisse Losses Turn Middle East Investors Cautious on Bank Deals - Bloomberg

Credit Suisse Losses Turn Middle East Investors Cautious on Bank Deals - Bloomberg

Middle Eastern investors are becoming more cautious of making fresh investments in global banks after emerging as some of the hardest hit by the Credit Suisse Group AG crisis.

Sovereign wealth funds and other investors in the region have been spooked by the market turmoil that wiped $1 billion from Saudi National Bank’s stake in the Swiss lender and are likely to be more wary on deals involving foreign financial firms, bankers and lawyers with knowledge of the matter said. The crisis is accelerating a pivot toward other sectors such as healthcare and technology, bankers said, asking not to be identified discussing matters that aren’t public.

The most recent losses on Credit Suisse are a stark reminder of a series of investments made by Gulf investors during the 2008 financial crisis - many of which ended in financial loss or legal battles. Flush with cash after oil’s recent surge, Middle Eastern investors had resumed exploring deals for foreign lenders. Any change in that strategy would be a blow to the global financial sector, potentially depriving Western institutions of much needed petrodollars.

“There have been some legacy issues in the Gulf around investments from the 2008 financial crisis and the Saudi National Bank experience with Credit Suisse will make them more nervous around the risks during this sensitive time,” said Ayham Kamel, head of Middle East and North Africa at political risk consultant Eurasia Group. “The Credit Suisse situation might also present some questions for Gulf sovereigns around ability to drive restructuring plans in some institutions.”