Credit Suisse’s Top Shareholder Cuts Stake Amid Turmoil

(Bloomberg) -- The Qatar Investment Authority cut its stake in Credit Suisse Group AG to below 5%, deepening the turmoil surrounding the firm after a pair of scandals this year left it the worst-performing major bank stock in Europe.

The Gulf nation sovereign wealth fund has a holding of 4.8% in Credit Suisse, or about 128 million shares, according to a filing with the Securities and Exchange Commission on Wednesday. The QIA had previously held about 133 million shares, making it the Swiss bank's biggest shareholder, according to Bloomberg data.

Credit Suisse has been hit this year by the blow-ups of Archegos Capital Management and Greensill Capital, which caused billions of dollars in losses and further dents to its reputation. Qatari investors have been a key backer of European banks as they recovered from the 2008 crisis, although comments from some officials suggests their focus is shifting.

The filing was triggered by the holding falling beneath the 5% threshold. That would mark the first reduction by QIA since 2010, according to data compiled by Bloomberg. The move also means that QIA may no longer be the Swiss bank's largest shareholder. Harris Associates has a holding of about 133 million shares, the data show.

Credit Suisse has stumbled from one imbroglio to the next in recent years. Still reeling from the fallout of a spying scandal that contributed to the exit of Chief Executive Officer Tidjane Thiam last year, the bank went on to take a write-down on a stake in a hedge fund. This year came the unraveling of Greensill's supply-chain finance empire, a key partner for Credit Suisse's asset management business.

Governance Questions

Yet it was Credit Suisse's losses on its exposure to family office Archegos, the largest among Wall Street banks, which raised the most serious questions over its risk management and governance. While the bank was quick to bolster its financial strength, its new Chairman, Antonio Horta-Osorio, has pledged a thorough review of the firm. He has said that the two recent crises went beyond any he'd lived through over three-and-a-half decades in the industry.

QIA is charged with preserving Qatar's oil and gas wealth and is one of the world's largest such sovereign funds with assets estimated at over $360 billion by Global SWF.

While Qatari investors' stakes in European banks predate the throes of the financial crisis, they have subsequently played a key role in supporting lenders. QIA still holds a stake in Barclays Plc after helping to prop up the U.K. investment bank in 2008.

Qatar's former prime minister, Sheikh Hamad bin Jassim Al Thani, stands to suffer a personal hit from Credit Suisse's woes, after vehicles linked to him invested about $200 million in funds the bank ran with Greensill, people familiar with the matter said earlier this year.